Plan  of  Srarganifattim 


OF 


The  Denver  and  Rio  Grande  Railroad 

Company 


Dated,  January  27,  1922 


The  Evening  Post  Job  Printing  Office,  Inc.,  154  Fulton  St.,  N.  Y. 


Digitized  by  the  Internet  Archive 
in  2015 


https://archive.org/details/planofreorganizaOOdenv 


New  York,  January  27,  1922. 


To  the  Holders  of 

The  Denver  and  Rio  Grande  Railroad  Company 
First  and  Refunding  Mortgage  5 % Gold  Bonds. 

Certificates  of  Deposit  for  said  Bonds  Issued 

under  the  Deposit  Agreement  relating  thereto,  dated  May  28,  1917. 

The  following  Plan  and  Agreement  for  the  reorganization  of  The  Denver  and  Rio  Grande  Railroad 
Company  has  been  proposed  to  the  undersigned  Committee  by  The  Western  Pacific  Railroad  Corporation 
(the  holding  company),  which  Corporation  has  agreed  to  be  bound  by  the  provisions  of  the  said  Plan  and 
Agreement,  if  approved  by  the  Committee  and  by  the  deposit  of  the  requisite  proportion  of  said  First  and 
Refunding  Mortgage  Bonds.  The  Plan  and  Agreement  has  been  approved  and  adopted  by  the  Committee. 

It  is  expected  that  the  consummation  of  the  Plan  will  result  in  (1)  the  furnishing  to  the  reorganized 
company  of  such  amount  of  cash  toward  the  rehabilitation  of  the  property  as  is  now  absolutely  necessary 
and  working  capital  urgently  needed,  besides  providing  for  the  expenses  of  the  reorganization.  The  cash 
is  to  be  supplied  by  the  Western  Pacific  Corporation  and  represents  a substantial  portion  of  the  amount  recov- 
ered from  the  old  Company  on  the  judgment  in  favor  of  The  Equitable  Trust  Company  of  New  York. 
For  it  the  reorganized  company  will  issue  only  common  stock.  The  consummation  of  the  Plan  will  further 
result  in  (£)  a financial  readjustment  which  should  adequately  provide  for  the  financing  of  the  future  require- 
ments of  the  system;  (3)  reduction  of  the  bonded  debt  and  fixed  charges  of  the  Company  to  a limit  believed 
to  be  safely  within  the  net  earning  capacity  of  the  reorganized  property.  Particular  attention  is  called  to 
the  provisions  of  the  Plan  with  respect  to  the  purchase  of  coupons  and  the  retroactive  interest  and  divi- 
dend provisions  to  be  inserted  in  the  new  securities. 

Provision  is  made  to  the  end  that,  if  the  Plan  should  not  be  consummated,  the  bonds  may  be 
returned  free  of  charge  to  such  depositors  as  shall  have  assented  to  the  Plan.  This,  however,  does  not 
apply  to  holders  of  Certificates  of  Deposit  who  dissent. 

The  Plan  is  recommended  by  the  Committee  as  in  the  interests  of  the  First  and  Refunding  Mortgage 
Bondholders  and  in  view  of  the  probable  default  in  the  payment  of  the  interest  due  on  February  1,  1922, 
Bondholders  are  urged  promptly  to  deposit  their  bonds  under  the  Plan. 


John  Henry  Hammond 


Chairman 


B.  W.  Jones 

Secretary 


Bertram  Cutler 
Charles  Hayden 


16  Wall  St. 


New  York  City 


Andrew  J.  Miller 
Frederick  Strauss 
Melvin  A.  Traylor 


Committee 


PLAN  OF  REORGANIZATION 

I. 

BONDS  WHICH  MAY  BE  DEPOSITED  UNDER  THE  PLAN. 

The  First  and  Refunding  Mortgage  Five  Per  Cent.  Gold  Bonds  of  The  Denver  and  Rio  Grande 
Railroad  Company,  with  coupons  maturing  February  1,  1922,  and  subsequent  coupons  attached. 

Depositary. 

BANKERS  TRUST  COMPANY 
16  Wall  St.,  New  York  City. 

Sub-Depositaries. 

FIRST  TRUST  AND  SAVINGS  BANK,  MERCANTILE  TRUST  COMPANY, 

68  West  Monroe  St.,  Chicago,  111.  St.  Louis,  Mo. 

PROVIDENT  LIFE  AND  TRUST  COMPANY,  THE  INTERNATIONAL  TRUST  COMPANY, 

Fourth  and  Chestnut  Sts.,  Philadelphia,  Pa.  Denver,  Colo. 

II. 

CONDITIONS  OF  PARTICIPATION  IN  PLAN. 

This  Plan  with  the  Agreement  attached  has  been  approved  and  adopted  by  the  Committee  represent- 
ing the  holders  of  First  and  Refunding  Mortgage  Five  Per  Cent.  Gold  Bonds  of  The  Denver  and  Rio 
Grande  Railroad  Company  under  the  Deposit  Agreement  dated  May  28,  1917,  and  a copy  of  this  Plan 
and  Agreement  has  been  filed  with  Bankers  Trust  Company,  as  Depositary  under  said  Deposit  Agreement, 
at  its  office  in  the  Borough  of  Manhattan  in  the  City  of  New  York.  Notice  of  such  filing  will  be  given 
in  accordance  with  the  provisions  of  the  Deposit  Agreement.  Every  holder  of  a Certificate  of  Deposit 
issued  under  the  Deposit  Agreement  who  shall  not  dissent  from  the  Plan  and  Agreement  in  the  manner 
and  within  the  period  prescribed  in  the  Deposit  Agreement  shall  be  conclusively  presumed  to  have  assented 
to  the  Plan  and  Agreement,  to  have  waived  any  right  of  withdrawal  given  by  the  Deposit  Agreement  and 
also  to  have  waived  the  provision  contained  in  the  Deposit  Agreement  limiting  the  time  within  which 
depositors  will  be  entitled  to  receive  the  new  securities  resulting  from  the  Plan.  Holders  of  Certificates  of 
Deposit  not  so  dissenting  will,  in  the  event  that  this  Plan  and  Agreement  shall  become  effective  and 
binding  on  holders  of  Certificates  of  Deposit  issued  under  said  Deposit  Agreement,  become  parties  to  this 
Plan  and  Agreement  without  the  issue  of  new  certificates,  and  their  rights  shall  be  such  and  such  only 
as  are  conferred  by  this  Plan  and  Agreement  and  shall  be  subject  to  compliance  with  such  terms  as  this 
Plan  and  Agreement  may  impose  as  conditions  of  participation  in  the  benefits  thereof.  Holders  of  Certifi- 
cates of  Deposit  who  shall  have  become  parties  to  this  Plan  and  Agreement  in  the  manner  above  provided 
may  at  any  time  present  their  Certificates  to  the  Depositary  to  be  stamped  as  assenting  to  this  Plan  and 
Agreement  as  provided  below  with  respect  to  Certificates  to  be  issued  to  holders  of  First  and  Refunding 
Mortgage  Bonds. 

Bidders  of  First  and  Refunding  Mortgage  Five  Per  Cent.  Gold  Bonds  of  The  Denver  and  Rio 
Grande  Railroad  Company,  not  heretofore  deposited,  may  become  entitled  to  the  benefits  of  this  Plan 
and  Agreement  by  depositing  their  said  bonds  with  coupons  payable  February  1,  1922,  and  all  subsequent 
coupons  attached,  with  the  Depositary  or  one  of  the  Sub-Depositaries  above-named,  on  or  before  March 
1,  1922.  Such  holders  shall  upon  such  deposit  receive,  in  respect  of  the  bonds  so  deposited,  certificates  of 
deposit  of  said  Depositary  issued  under  the  Deposit  Agreement  of  May  28,  1917,  stamped  as  assenting  to 
this  Plan  and  Agreement,  and  by  the  acceptance  thereof  shall  be  deemed  to  have  assented  to  this  Plan  and 
Agreement,  to  have  waived  any  right  of  withdrawal  given  by  the  Deposit  Agreement  and  also  to  have 
waived  the  provision  contained  in  the  Deposit  Agreement  limiting  the  time  within  which  depositors  will 
be  entitled  to  receive  the  new  securities  resulting  from  the  Plan.  Holders  of  such  stamped  certificates  of 
deposit  shall  be  bound  by  this  Plan  and  Agreement,  and  their  rights  shall  be  such  and  such  only  as  are  con- 
ferred thereby  and  shall  be  subject  to  compliance  with  such  terms  as  this  Plan  and  Agreement  may  impose 
as  conditions  of  participation  in  the  benefits  thereof. 

III. 

CONDITIONS  OF  PARTICIPATION  IN  PURCHASE  OF  FEBRUARY  1,  1922  COUPON. 

Holders  of  Certificates  of  Deposit  already  issued  under  the  Deposit  Agreement  dated  May  28, 
1917,  may  participate  in  the  benefits  of  the  purchase  by  The  Western  Pacific  Railroad  Corporation,  herein- 
after provided  for,  of  the  coupon  on  the  Refunding  Bonds  payable  February  1,  1922,  only  upon  signing  and 
filing  with  the  Depositary  above-named  a written  assent  to  this  Plan  and  Agreement  containing  a waiver  of  all 
right  of  withdrawal  given  by  the  Deposit  Agreement  and  of  the  provision  contained  in  the  Deposit  Agree- 
ment limiting  the  time  within  which  depositors  will  be  entitled  to  receive  the  new  securities  resulting  from 
the  Plan,  and  upon  presenting  their  Certificates  of  Deposit  to  the  Depositary,  to  be  stamped  accordingly. 
Blank  forms  for  such  assent  may  be  obtained  from  the  Depositary  or  any  of  the  Sub-Depositaries. 

Holders  of  Refunding  Bonds,  not  yet  deposited,  will  be  entitled  to  participate  in  the  benefit  of  such 
purchase  merely  by  the  deposit  of  their  bonds. 


2 


IV. 

TERMINOLOGY  USED  IN  THE  PLAN. 


As  used  in  this  Plan  for  convenience  of  reference,  the  following  terms  have  the  meanings  below  speci- 
fied respectively : 

The  “Old  Denver  Company”  means  The  Denver  and  Rio  Grande  Railroad  Company,  being  the  cor- 
poration which  formerly  owned  the  Denver  and  Rio  Grande  system  of  railways. 

The  “New  Company”  means  The  Denver  and  Rio  Grande  Western  Railroad  Company  recently 
formed  under  the  laws  of  the  State  of  Delaware,  which  now  owns  and  operates  the  system.  It  also  com- 
prehends any  other  corporation  to  be  formed  or  now  existing  which  may  be  employed  to  take  title  to  the 
properties  now  owned  by  The  Denver  and  Rio  Grande  Western  Railroad  Company,  as  contemplated  by  this 
Plan,  and  the  successors  of  either  or  both  said  companies  in  the  ownership  and/or  operation  of  the  system. 

The  “Western  Pacific  Corporation”  means  The  Western  Pacific  Railroad  Corporation,  the  holding 
company  which  now  owns  the  stock  of  The  Western  Pacific  Railroad  Company  and  the  stock  of  The 
Denver  and  Rio  Grande  Western  Railroad  Company. 

“Refunding  Bonds”  means  the  First  and  Refunding  Mortgage  Five  Per  Cent.  Gold  Bonds  of  the 
Old  Denver  Company. 

“Refunding  Mortgage”  means  the  First  and  Refunding  Mortgage  of  the  Old  Denver  Company  to 
Bankers  Trust  Company,  Trustee,  dated  August  1,  1908,  securing  the  Refunding  Bonds. 

“Adjustment  Bonds”  means  the  Seven  Per  Cent.  Cumulative  Adjustment  Mortgage  Gold  Bonds  of 
the  Old  Denver  Company. 

“Adjustment  Mortgage”  means  the  Adjustment  Mortgage  of  the  Old  Denver  Company  to  The  New 
York  Trust  Company,  Trustee,  dated  May  1,  1912,  securing  the  Adjustment  Bonds. 

The  “Committee”  means  the  Committee  constituted  by  the  Deposit  Agreement  dated  May  28,  1917, 
for  the  Refunding  Bonds. 

V. 

PRELIMINARY  STATEMENT. 

The  railroad  properties  of  the  Old  Denver  Company  and  various  treasury  securities  were  sold  on 
November  20,  1920,  pursuant  to  a decree  of  sale  made  by  the  United  States  District  Court  for  the  District 
of  Colorado  in  a cause  entitled  “The  Equitable  Trust  Company  of  New  York,  as  Trustee,  Intervenor  and 
Substituted  Plaintiff,  vs.  The  Denver  and  Rio  Grande  Railroad  Company,  Defendant,  In  Equity  No.  6782.” 
All  of  the  railroad  properties  and,  with  minor  exceptions  (consisting  principally  of  securities  of  the  Rio 
Grande  Southern  Railway  Company  which  have  been  transferred  to  the  Western  Pacific  Corporation), 
the  railroad  securities  formerly  in  the  treasury  of  the  Old  Denver  Company  and  remaining  in  its  owner- 
ship at  the  time  of  sale,  were  sold  to  and  have  been  transferred  to  the  New  Company.  These  properties 
(so  far  as  subject  to  liens)  were  acquired  subject  to  the  liens  which  existed  at  the  date  of  sale  and  the 
Committee  is  advised  that  no  further  liens  have  been  created.  The  transfer  took  place  at  the  end  of 
July,  1921,  the  completion  of  the  sale  having  been  delayed,  first  by  litigation  (instituted  by  a committee 
representing  certain  stockholders  in  the  Old  Denver  Company  and  eventually  decided  adversely  to  that 
Committee’s  contentions)  and  subsequently  by  the  necessity  of  obtaining  the  approval  by  the  Interstate 
Commerce  Commission  of  the  issuance  of  stock  essential  to  the  acquisition  of  the  properties  by  the  New 
Company.  This  stock  has  now  been  issued  to  the  Western  Pacific  Corporation  and  consists  of  300,000 
shares  of  common  stock  without  par  value,  being  the  only  stock  of  the  New  Company  outstanding. 

Subsequently  to  the  confirmation  of  sale  but  in  largest  part  prior  to  action  by  the  Interstate  Com- 
merce Commission,  there  occurred  heavy  floods  in  the  Pueblo  District  and  elsewhere  in  Colorado,  which 
occasioned  interruption  of  traffic  and  extraordinary  and  very  heavy  damage  to  the  physical  properties  of  the 
Denver  and  Rio  Grande  system,  which  it  is  estimated  have  required  and  will  require  in  the  aggregate  an 
expenditure,  estimated  to  amount  to  $2,075,000  during  the  year  1921  and  the  early  part  of  1922,  for 
extraordinary  maintenance  purposes.  The  foregoing  estimate  does  not  take  into  account  expenditures  occa- 
sioned by  such  damage  to  roadbed  as  has  not  been  sufficiently  serious  to  occasion  interruption  of  traffic. 
It  covers  only  maintenance  necessary  to  restore  the  property  to  a condition  believed  to  be  fairly  com- 
parable with  that  which  existed  prior  to  the  floods  in  question. 


3 


During  the  years  immediately  prior  to  the  late  receivership  of  the  Old  Denver  Company,  various 
reports  were  made  upon  the  condition  and  needs  of  the  property  by  railway  men  and  engineers  and  recently 
these  reports,  as  well  as  the  property  itself,  have  been  re-examined  by  Mr.  Joseph  H.  Young,  the 
President  of  the  New  Company,  with  the  assistance  of  its  operating  and  engineering  staff.  Mr.  Young’s 
program  of  rehabilitation  and  improvement  calls  for  the  expenditure  during  the  years  1922-1926  of 
approximately  the  sum  of  $20,670,237,  of  which  it  is  estimated  that  $4,879,637  will  be  required  for 
replacements  and  other  work  chargeable  to  operation,  $7,982,500  for  additions  and  betterments  to  road  and 
structures  chargeable  to  capital  account  and  $7,808,100  for  new  motive  power  and  equipment.  It  will  also 
be  necessary,  in  the  opinion  of  Mr.  Young,  that  further  large  expenditures  for  like  purposes  shall  be  made 
during  the  years  immediately  following  1926.  A copy  of  Mr.  Young’s  letter  is  attached  (Exhibit  5). 

Owing  to  the  low  price  which  the  Refunding  Bonds  command  on  the  market  and  the  limited  amount 
of  additional  bonds  that  may  be  issued  under  that  mortgage  (except  for  refunding  purposes),  it  is  imprac- 
ticable to  raise  the  funds  necessary  for  the  purposes  above  referred  to  by  further  issue  of  Refunding  Bonds. 
But  the  extinguishment  of  the  Refunding  and  Adjustment  Mortgages  of  the  Old  Denver  Company  which 
is  contemplated  by  this  Plan  will  ultimately,  it  is  believed,  make  it  practicable  through  the  medium  of  a 
bond  issue  of  the  New  Company,  to  finance  the  future  requirements  of  the  system. 

The  funded  debt  which  is  now  charged  upon  the  property  of  the  New  Company,  all  created  by  the 
Old  Denver  Company  or  its  constituent  corporations  (none  of  which  has  been  assumed  by  the  New  Com- 
pany), is  the  following: 


THE  DENVER  AND  RIO  GRANDE  RAILROAD  COMPANY  FUNDED  DEBT. 


In  hands  of  Public: 

Underlying  Bonds: 

D&RGRRCO.  First  Cons.  Mtge.  4%  Bonds,  due  Jan.  1,  1936  

D&RGRRCO.  First  Cons.  Mtge.  4p2%  Bonds,  due  Jan.  1,  1936 

D&RGRRCO.  Improvement  Mtge.  5%  Bonds,  due  June  1,  1928 

RGWRyCO.  First  Trust  Mtge.  4%  Bonds,  due  July  1,  1939  

RGWRyCO.  First  Cons.  Mtge.  4%  Bonds,  due  Apr.  1,  1949  

Principal. 

$34,125,000.00 

6.382.000. 00 

8.335.000. 00 

15.190.000. 00 

15.080.000. 00 

Annual 

Interest. 

$1,365,000.00 

287.190.00 

416.750.00 

607.600.00 

603.200.00 

System  Bonds: 

D&RGRRCO.  First  & Ref.  Mtge.  5%  Bonds,  due  Aug.  1,  1955  

D&RGRRCO.  Adj.  Mtge.  7%  Bonds  (Income-Cumulative),  due  Apr.  1,  1932 

$79,112,000.00 

$31,114,000.00 

10,000,000.00 

$3,279,740.00 

$1,555,700.00 

700,000.00 

Total  in  hands  of  public 

In  Sinking  Funds: 

First  and  Refunding  Mtge.  5%  Bonds  in  Sinking  Fund  (Interest  bearing)  

$41,114,000.00 

$120,226,000.00 

$2,830,000.00 

$2,255,700.00 

$5,535,440.00 

$141,500.00 

120,000.00 

Sinking  Fund — Annual  Installment 

Total  interest  bearing  bonded  debt  and  fixed  charges  of  Old  Denver  Company. 
Rio  Grande  Junction  Ry.  Co. — First  Mortgage  5%  Bonds  

$123,056,000.00 

2,000,000.00 

$5,796,940.00 

100,000.00 

Total  interest  bearing  bonded  debt  and  fixed  charges  of  the  system 

$125,056,000.00 

$5,896,940.00 

The  Rio  Grande  Junction  Railway  Company  First  Mortgage  Bonds  are  added  to  the  above  statement 
because  that  Company  owns  a line  of  railway  constituting  an  integral  part  of  The  Denver  and  Rio  Grande 

system. 

As  above  stated,  the  Improvement  Mortgage  Bonds  of  The  Denver  and  Rio  Grande  Railroad  Com- 
pany, of  which  $8,335,000  are  held  by  the  public,  fall  due  June  1,  1928. 

The  New  Company  owes  The  Western  Pacific  Railroad  Corporation  the  sum  of  approximately  $629,000 
for  money  advanced  to  enable  the  New  Company  to  pay  the  installment  of  interest  on  the  Refunding  Bonds 
which  fell  due  August  1,  1921,  and  for  organization  expenses.  This  indebtedness  is  unsecured  and  rests 
in  open  account. 

As  appears  from  Exhibit  4 annexed  hereto,  during  the  first  six  months  of  1921,  the  Denver  and  Rio 
Grande  system,  then  in  receivership,  failed  to  earn  theinterest  upon  its  funded  debt;  no  interest  whatever 
upon  either  the  Refunding  Bonds  or  the  Adjustment  Bonds  was  earned;  nor  was  anything  earned  on  account 
of  the  sinking  fund  installment  required  to  be  paid  for  the  current  year  by  the  Refunding  Mortgage;  and  the 


4 


February  1,  1922. 


To  the  Stockholders  of 

THE  WESTERN  PACIFIC  RAILROAD  CORPORATION: 

On  the  first  day  of  August,  1921,  transfers  of  the  properties  of  The  Denver  and  Rio  Grande 
Railroad  Company  (the  Old  Denver  Company)  to  The  Denver  and  Rio  Grande  Western  Railroad 
Company  (all  stock  in  which  is  owned  by  this  Corporation)  were  made  pursuant  to  decrees  of  the 
Federal  Court  which  had  theretofore  held  such  properties  under  the  control  of  its  Receiver. 

Certain  matters  connected  with  the  receivership  (involving  accounts  between  the  Old  Denver 
Company  and  the  United  States,  arising  out  of  the  so-called  Federal  Guaranty),  are  still  unsettled, 
but  substantially  all  of  the  important  assets  of  the  Denver  Company  have  been  sold.  This  Cor- 
poration is  now  the  owner  of  the  following  securities,  properties  and  moneys : 

The  entire  capital  stock  of  The  Western  Pacific  Railroad  Company,  (operating  the 
Western  Pacific  lines)  ; 

. The  entire  capital  stock,  (300,000  shares  without  par  value)  of  The  Denver  and 

Rio  Grande  Western  Railroad  Company,  (operating  the  Denver  and  Rio  Grande  lines)  ; 

The  entire  issue  of  the  capital  stock  of  The  Western  Realty  Company,  (a  timber- 
owning corporation),  appraised  and  purchased  by  this  Corporation  for  the  sum  of 
$1,000,000;  and 

The  entire  capital  stock  of  Utah  Fuel  Company,  (a  large  coal  producing  company 
operating  in  Utah  and  Colorado),  which,  however,  is  pledged  as  part  security  under  the 
First  Consolidated  Mortgage  of  The  Rio  Grande  Western  Railway  Company  but  is 
redeemable  upon  payment  of  $6,000,000  in  cash  or  in  bonds  issued  under  said  mortgage. 

It  is  also  the  owner  of  about  99%  of  all  of  the  bonds  and  stock  of  the  Sacramento  Northern 
Railroad  in  which  this  Corporation  has  invested  approximately  $4,337,000  (to  be  reimbursed  as 
explained  below)  ; also  Liberty  Bonds,  stock  in  the  Rio  Grande  Junction  Railway  Company, 
work  equipment  (in  use  by  The  Denver  and  Rio  Grande  Western  Railroad  Company),  miscel- 
laneous bonds  and  stock  of  other  corporations,  (principally  underlying  bonds  of  the  Old  Denver 
Company)  and  cash  and  receivables  all-told,  estimated  to  represent  an  additional  value  of  approx- 
imately $6,650,000,  most  of  which  is  readily  realizable.  It  is  the  owner  of  $5,175,000  principal 
amount  of  Adjustment  Mortgage  Bonds  of  the  Old  Denver  Company  which  are  pledged  to 
secure  an  equal  amount  of  the  Four  Per  Cent.  Ten  Year  Secured  Notes  of  this  Corporation,  but 
may  be  withdrawn,  pari  passu,  as  notes  are  surrendered  for  cancellation.  It  owns  a relatively 
small  amount  of  stocks  and  notes  of  this  Corporation  and  bonds  of  The  Western  Pacific  Rail- 
road Company  having,  however,  a substantial  value;  also  various  stocks,  bonds  and  claims  against 
subsidiary  and  other  corporations  to  which  no  value  can  now  be  assigned. 

Substantially  the  only  indebtedness  of  this  Corporation,  other  than  for  current  operation 
and  legal  expenses,  consists  of  $5,175,000  of  the  Four  Per  Cent.  Ten  Year  Secured  Notes  above 
mentioned. 

The  indebtedness  of  the  Old  Denver  Company,  which  is  secured  by  a lien  upon  the  proper- 
ties of  The  Denver  and  Rio  Grande  Western  Railroad  Company  (but  none  of  which  has  been 
assumed  by  The  Denver  & Rio  Grande  Western  Railroad  Company),  is  set  forth  in  detail  on 
page  4 of  the  Plan  of  Reorganization  mentioned  below. 

DENVER  AND  RIO  GRANDE  REORGANIZATION 

Protracted  negotiations  extending  over  considerably  more  than  a year  have  been  conducted 
with  the  Protective  Committee  representing  the  holders  of  bonds  secured  by  the  First  and 


Refunding  Mortgage  of  the  Old  Denver  Company,  and  as  a result  of  these  negotiations  a Plan 
of  Reorganization  which  is  substantially  identical  with  the  plan  of  reorganization  referred  to  in 
this  Corporation’s  letter  to  its  Stockholders  dated  November  1,  1920,  has  been  agreed  upon 
between  the  Protective  Committee  and  this  Corporation.  There  is  enclosed  herewith  a copy  of 
the  Plan  of  Reorganization,  which  sets  forth,  also,  the  condition,  requirements  and  earnings  of 
the  Denver  & Rio  Grande  property. 

Briefly  summarized,  the  Plan  contemplates  the  extinguishment,  by  foreclosure  or  otherwise, 
of  the  Refunding  and  Adjustment  Mortgages  of  the  Old  Denver  Company,  transfer  of  the 
properties  subject  thereto  to  The  Denver  and  Rio  Grande  Western  Railroad  Company  or  to  a 
New  Company,  which  shall  hold  also  all  unmortgaged  assets  of  The  Denver  and  Rio  Grande 
Western  Railroad  Company,  and  the  creation  by  the  Reorganized  Denver  Company  of  an  open 
Unifying  Mortgage  (to  rank  next  after  the  existing  divisional  mortgages)  which  it  is  believed  will 
afford  sufficient  credit  to  provide  funds  for  necessary  future  capital  expenditures.  In  subordination 
to  this  Unifying  Mortgage  there  is  to  be  created,  in  event  that  the  Plan  is  carried  into  effect,  a 
mortgage  termed  in  the  Plan  a “Sinking  Fund  Mortgage”.  The  Sinking  Fund  Mortgage  will  be 
a closed  mortgage  securing  not  to  exceed  (approximately)  $20,557,000.  5%  Bonds  which  may 
be  issued  in  part  exchange  for,  or  sold  and  their  proceeds  applied  towards  the  satisfaction  of, 
the  existing  Refunding  issue  and/or  Adjustment  issue  of  the  Old  Denver  Company.  There 
is  also  authorized  the  issuance  of  not  to  exceed  $50,000,000.  par  value  of  7%  Cumulative  Pre- 
ferred Stock  of  the  reorganized  Denver  Company,  of  which  a maximum  of  approximately 
$25,557,000.,.  par  value,  may  be  issued  in  part  exchange  for,  or  sold  and  the  proceeds  applied  to 
the  extinguishment  of,  the  Refunding  and  Adjustment  Bonds  of  the  Old  Denver.  The  Plan 
authorizes  provision  to  be  made  for  settlement  of  the  claims  of  Adjustment  Bondholders  on 
account  of  accrued  but  unearned  interest  by  means  of  Preferred  Stock  or  Preferred  Stock  and 
Sinking  Fund  Bonds.  The  amount  of  Sinking  Fund  bonds  authorized  to  be  issued  is  not  to 
exceed  50%  of  the  face  value  of  Refunding  and  Adjustment  Bonds  and  interest  upon  Adjust- 
ment Bonds  accrued  and  unpaid.  No  agreement  has  yet  been  made  with  the  Adjustment  Bond- 
holders. A majority  of  the  issue,  however,  is  owned  by  this  Corporation.  The  Common  Stock 
of  the  New  Denver  Company,  or  its  successor,  will  be  increased  by  the  issuance  of  100,000 
shares,  probably  without  par  value;  this  stock  will  be  Common  Stock  subordinate  to  the  Pre- 
ferred Stock,  and  is  to  be  purchased  by  this  Corporation  through  payment  of  cash  (and  assets 
accepted  as  the  equivalent  of  cash)  amounting  in  the  aggregate  to  a sum  somewhat  in  excess 
of  $10,000,000.  The  entire  plan  is  subject  to  its  acceptance  by  an  adequate  proportion  of 
Refunding  bonds  and  to  the  approval  of  the  Interstate  Commerce  Commission. 

The  fact  that  some  such  readjustment  as  that  proposed  is  essential  in  order  that  The  Denver 
and  Rio  Grande  Railroad  may  be  financed  and  perform  adequate  services  as  a carrier  has  been 
long  recognized  by  everyone  familiar  with  the  condition  of  the  property  and  its  operating  condi- 
tions. The  Western  Pacific  Railroad  Company’s  dependence  on  the  lines  of  the  Denver  and 
Rio  Grande  for  its  westbound  business,  and  also  for  the  satisfactory  handling  of  the  larger 
portion  of  its  eastbound  traffic  makes  it  essential  that  this  Corporation  see  to  it  that  the  Denver 
System,  if  reasonably  possible,  shall  be  reorganized  in  such  a manner  as  to  make  it  an  efficient 
instrumentality  of  commerce. 

If  the  Plan  be  carried  out,  the  result  of  all  proceedings  against  the  Old  Denver  Company 
taken  by  this  Corporation  will  have  been  the  (a)  substitution  of  this  Corporation  for  the  former 
stockholders  of  the  Old  Denver  Company  under  a Plan  by  which  the  securities  of  the  Old 
Denver  Company  are  so  readjusted  as  to  make  possible  the  necessary  financing  of  future 
requirements,  ( b ) the  reinvestment  in  the  common  stock  of  the  Reorganized  Company  of  all 
money  and  property  heretofore  received  by  this  Corporation  as  a result  of  litigation  (save  and 
except  the  equity  in  the  stock  of  the  Utah  Fuel  Company  and  a cash  reserve  of  a relatively 


small  amount  not  now  susceptible  of  determination),  and  (c)  the  subordination  thereof  to  secu- 
rities issued  in  lieu  of  the  Adjustment  and  Refunding  Bonds  of  the  Old  Denver  Company. 


UTAH  FUEL  STOCK 

This  stock  is  pledged,  as' stated,  under  the  First  Consolidated  Mortgage  of  The  Rio  Grande 
Western  Railway  Company  pursuant  to  a special  agreement  providing  for  the  release  thereof  on 
the  payment  of  $6,000,000,  or  the  cancellation  of  First  Consolidated  Mortgage  bonds  in  an  equal 
amount. 

The  stock  of  the  Utah  Fuel  Company  was  sold  under  execution  in  1918  (having  been 
attached  in  1917)  and  was  purchased  for  the  benefit  of  this  Corporation  subject  to  the  conditions 
of  the  pledge  above  mentioned.  Title  of  this  Corporation  to  the  stock,  however,  is  still  called 
in  question  by  the  Bankers  Trust  Company  and  The  New  York  Trust  Company,  Trustees  of  the 
Refunding  and  Adjustment  Mortgages.  It  is  believed  that  no  substantial  doubt  concerning  the 
success  of  this  Corporation  in  the  pending  litigation  which  involves  that  question  (as  well  as 
the  right  of  this  Corporation  to  retain  the  dividends  .upon  the  stock  which  it  has  received)  can 
reasonably  be  entertained  but  in  any  event  the  execution  of  the  Plan  of  Reorganization  neces- 
sarily will  remove  any  such  doubt,  if  any  be  possible. 


SACRAMENTO  NORTHERN  RAILROAD 

The  securities  of  the  Sacramento  Northern  Railroad  were  purchased  by  this  Corporation  for 
transfer  to  The  Western  Pacific  Railroad  Company;  this  transfer  has  been  authorized  by  the 
Railroad  Commission  of  California ; bonds  of  The  Western  Pacific  Railroad  Company,  the  pro- 
ceeds of  which  are  sufficient  fully  to  reimburse  this  Corporation  for  expenditures  made  in 
acquiring  the  Sacramento  Northern  securities,  have  been  sold  and  the  cash  with  which  to  reimburse 
this  Corporation  is  held  available  by  The  Western  Pacific  Railroad  Company.  The  transfer  will 
be  made  as  soon  as  approved  by  the  Interstate  Commerce  Commission  and  the  stockholders  of 
this  Corporation.  This  will  result  in  this  Corporation’s  receiving  in  cash  the  amount  of  its  invest- 
ment in  the  property  and/or  securities  of  the  Sacramento  Northern  and  the  transfer  of  the  latter 
to  a subsidiary  of  The  Western  Pacific  Railroad  Company. 


WESTERN  PACIFIC  RAILROAD  COMPANY 

Like  all  lines  similarly  situated,  The  Western  Pacific  Railroad  Company  has  suffered  seriously 
during  the  past  year  by  reason  of  the  general  depression  of  business  and  of  water-competition 
through  the  Panama  Canal.  The  Company,  however,  has  earned  the  interest  accruing  upon  its 
bonds  and  car  trust  certificates  and  a substantial  amount  applicable  to  dividends  upon  this  Cor- 
poration’s preferred  stock.  During  1921  however,  dividends  upon  preferred  stock  have  been  paid 
largely  out  of  the  earnings  of  previous  periods  for  which  dividends  thereon  had  been  earned  but 
not  paid,  in  whole  or  in  part.  At  the  end  of  the  year  1921,  there  remained  dividends  accrued  and 
unpaid  upon  preferred  stock,  to  which  available  earnings  of  previous  years  were  applicable,  aggre- 
gating approximately  5pj%.  It  is  expected  that,  if  and  as  required,  this  reserve  will  be  used, 
supplementing  earnings,  for  the  payment  of  dividends  on  the  preferred  stock  now  outstanding. 

The  Western  Pacific  Railroad  Company  now  has  outstanding  $26,946,500.,  principal  amount 
of  First  Mortgage  bonds  of  which  $3,000,000  bear  interest  at  the  rate  of  6%  per  annum  and  the 
remainder  at  5%.  It  has  on  hand,  in  excess  of  all  existing  capital  commitments,  (including  pay- 
ment for  Sacramento  Northern  securities  and/or  properties  above-mentioned),  cash,  either  in  its 
treasury  or  upon  deposit  under  its  First  Mortgage,  amounting  in  the  aggregate  to  more  than 
$6,000,000. 

In  1918,  when  it  was  impossible  for  The  Western  Pacific  Railroad  Company  to  use  the  funds 
held  under  its  First  Mortgage,  (on  account  of  Government  control  of  its  properties  and  equip- 


ment)  the  Railroad  Company  issued  and  sold  $3,600,000,  principal  amount  of  Car  Trust  Certifi- 
cates secured  by  cars  and  locomotives  costing  in  excess  of  $4,000,000.  Of  these  certificates 
$900,000  were  paid,  up  to  and  including  August  1,  1921.  The  Railroad  Company  has  recently 
sold,  under  competitive  bidding,  with  the  sanction  of  the  Interstate  Commerce  Commission, 
$3,000,000,  principal  amount,  of  its  First  Mortgage  6%  Bonds  (ranking  as  to  security  with  its 
previously  issued  5%  bonds)  at  97.7779  and  has  arranged  to  retire  with  the  proceeds  the  remain- 
ing $2,700,000  outstanding  Car  Trust  Certificates.  When  this  operation  has  been  completed,  no 
part  of  the  equipment  of  The  Western  Pacific  Railroad  Company  will  be  subject  to  any  car  trust 
or  similar  arrangement. 


STOCK  DIVIDEND 

It  is  intended  that  in  the  event  that  the  reorganization  contemplated  by  the  accompanying 
Plan  of  Reorganization  shall  be  effected,  the  stock-dividend  referred  to  in  this  Corporation’s  letter 
to  its  stockholders,  dated  November  1,  1920,  shall  be  declared;  that  is  to  say,  that  additional  pre- 
ferred and  common  stock  of  this  Corporation  will  be  distributed  to  its  stockholders  at  the  rate 
of  one  share  of  preferred  and  one  share  of  common  stock  for  each  six  shares  of  preferred  or 
common  stock  outstanding,  preferred  and  common  stock  sharing  alike.  This  dividend  is  for  the 
purpose  of  recognizing  the  rights  of  common  stockholders  in  any  current  benefits  arising  from 
the  assets  derived  from  recoveries  against  the  Old  Denver  Company  and  the  equal  rights  of  pre- 
ferred stockholders  in  the  fund  arising  from  such  recoveries,  all  as  contemplated  and  authorized 
by  the  Amended  Articles  of  Incorporation  of  this  Corporation. 

Respectfully  Submitted, 

By  Order  of  the  Board  of  Directors, 

TPIE  WESTERN  PACIFIC  RAILROAD  CORPORATION, 

By  Alvin  W.  Krech, 

Chairman. 


K2885 


system  failed  to  earn  a substantial  portion  of  the  amount  required  for  the  payment  of  the  interest  accruing 
upon  its  underlying  bonds. 

The  Committee  is  informed  that  during  the  last  six  months  of  1921,  the  system  showed  a substantial 
improvement  in  earnings  but  during  that  period,  after  providing  for  the  interest  accruing  upon  underlying 
bonds,  failed  by  a large  amount  to  earn  the  interest  and  sinking  fund  installment  currently  accruing  upon 
its  Refunding  Bonds  (For  the  results  of  the  first  eleven  months  of  1921,  see  Exhibit  4,  annexed  hereto). 
The  New  Company,  on  January  7,  1922,  had  on  hand  and  in  transit,  available  for  interest  upon  underlying 
bonds,  taxes  and  working  capital  only  the  sum  of  approximately  $780,000.  It  is  certain,  therefore,  that 
(after  providing  for  the  extraordinary  maintenance  charges  occasioned  by  flood  damage)  the  installment  of 
interest  upon  the  Refunding  Bonds  falling  due  February  1,  1922,  will  not  have  been  earned,  and  that  the 
New  Company  will  not  have  available  funds  wherewith  to  meet  it. 

There  are  attached  hereto : 

(1)  Comparison  of  Capitalization  and  Fixed  Charges. 

(2)  General  Balance  Sheet  of  The  Dehver  and  Rio  Grande  Western  Railroad  Company  at 
the  time  of  taking  over  its  property,  August  1,  1921. 

(3)  A statement  of  the  net  income  of  the  Old  Denver  Company  from  railroad  operations 
applicable  to  payment  of  interest,  1901  to  1920,  inclusive. 

(4)  A similar  consolidated  income  account  of  (a)  the  Receiver  of  the  Old  Denver  Company 
and  ( b ) the  New  Company,  January  to  November,  inclusive,  1921. 

(5)  Letter  of  President  J.  H.  Young,  of  the  New  Company,  dated  October  27,  1921. 

(6)  Letter  of  President  A.  R.  Baldwin  of  The  Western  Realty  Company  dated  January  18, 
1922,  as  to  the  estimated  value  of  the  properties  of  that  Company. 

VI. 

NEW  COMPANY. 

The  Refunding  Bonds  and  the  Adjustment  Bonds  will  be  extinguished  by  foreclosure  or  other- 
wise, and  all  of  the  property  of  the  existing  New  Company,  The  Denver  and  Rio  Grande  Western  Rail- 
road Company,  (including  property  not  encumbered  by  mortgage,  estimated  to  be  of  the  value  of  at 
least  $3,500,000)  will  be  retained  by  it  or  vested  in  a new  company  to  be  formed  for  that  purpose, 
in  either  case  free  from  the  lien  of  the  mortgages  securing  the  two  issues  of  bonds  aforesaid,  or  substantially 
that  result  will  be  brought  about  by  some  method  to  be  agreed  upon  by  the  Western  Pacific  Corporation  and 
the  Committee.  The  said  property  shall  be  so  retained  or  taken  over,  as  the  case  may  be,  by  the  New  Com- 
pany subject  only  to  such  changes  therein  as  may  result  from  the  ordinary  course  of  the  business  of  The 
Denver  and  Rio  Grande  Western  Railroad  Company  and  the  operation  of  the  system,  and  subject  to  current 
obligations  and  mortgage  liens  (except  as  above  provided)  and  the  reservations  of  the  Decrees  of  Sale  and 
Confirmation  under  which  The  Denver  and  Rio  Grande  Western  Railroad  Company  now  holds  the  same. 
Pending  the  execution  or  abandonment  of  the  Plan,  earnings  of  The  Denver  and  Rio  Grande  Western  Rail- 
road Company  shall  not  be  distributed  or  withdrawn  by  the  Western  Pacific  Corporation  through  the  medium 
of  dividends  or  otherwise  for  its  own  benefit. 

VII. 

PROVISION  FOR  CASH  REQUIREMENTS. 

The  estimated  cash  requirements  of  the  Plan  are  $10,000,000.  It  is  estimated  that  this  amount 
should  be  made  available  for  use  as  contemplated  hereby,  in  addition  to  present  working  capital,  in  order 
that  the  railroad  properties  of  the  New  Company  may  be  efficiently  and  economically  operated.  In  the  event 
that  this  Plan  is  fully  consummated,  the  Western  Pacific  Corporation  is  to  supply  this  amount  in  cash  or 
property  or  in  securities  to  be  converted  into  cash,  of  which,  except  as  hereinafter  provided,  not  less  than 
$5,000,000  shall  be  made  available  to  the  New  Company  within  one  year  from  the  date  of  the  completion 
of  the  reorganization  hereunder;  not  less  than  an  aggregate  of  $8,350,000  (i.  e.,  an  additional  $3,350,000) 
within  two  years  from  said  date;  and  not  less  than  an  aggregate  of  $10,000,000  (i.  e.  an  additional 


5 


$1,650,000)  within  three  years  from  said  date.  In  consideration  for  the  cash  or  its  equivalent  so  supplied 
the  Western  Pacific  Corporation  shall,  as  payments  are  made,  receive  common  stock  of  the  New  Company. 

The  Western  Pacific  Corporation  now  holds  on  deposit  cash  and  securities,  subject  to  an  agreement 
that  it  will  continue  to  hold  the  same  or  equivalent  substitutes  until  its  right  to  the  dividends  which  it 
has  already  received  from  Utah  Fuel  Company  shall  be  definitely  established,  amounting  to  $2,925,000. 
If  the  right  of  the  Western  Pacific  Corporation  to  retain  said  dividends  shall  not  have  been  finally  established 
at  the  time  that  any  one  or  more  of  the  instalments  of  cash  is  to  be  paid  as  above  provided,  payment  of  a 
portion  of  such  instalment  is  to  be  postponed  until  such  right  is  finally  established.  The  amounts  so  to  be 
postponed  shall  be  $1,000,000  in  respect  of  the  first  instalment  and  $500,000  in  respect  of  each  of  the  other 
two  instalments;  but  in  the  event  of  any  such  postponement,  when  such  right  shall  have  been  finally  estab- 
lished, if  the  period  during  which  any  of  said  instalments  is  so  to  be  supplied  shall  have  expired,  the 
obligation  to  supply  the  full  amount  of  said  instalment  shall  immediately  thereupon  accrue.  If  this  Plan 
be  consummated,  the  Western  Pacific  Corporation  will,  immediately  upon  the  final  establishment  of  its 
rights  to  said  dividends,  add  to  the  deposit  to  be  made  by  it  with  The  Equitable  Trust  Company  of  New 
York,  as  hereinafter  provided,  the  amount  of  said  dividends  ($2,925,000)  in  cash  and/or  readily  salable 
securities  of  equivalent  market  value. 

In  addition  to  the  $10,000,000  to  be  supplied  by  it  as  aforesaid,  the  Western  Pacific  Corporation  will, 
upon  the  consummation  of  the  Plan  and  previously  to  the  actual  exchange  of  securities  as  provided  in 
Article  IX,  (1)  transfer  to  the  New  Company  the  work  equipment  purchased  by  it  at  a cost  of  $143,003.83 
and  now  under  lease  to  the  New  Company,  (2)  transfer  to  the  New  Company  Rio  Grande  Junction  Railway 
Company  stock  heretofore  purchased  by  the  Western  Pacific  Corporation  at  a cost  of  $64,062.50,  and  (3) 
cancel  and  release  or  transfer  the  indebtedness  of  the  New  Company  to  it  amounting  to  approximately 
$629,000. 

On  account  of  the  $10,000,000  to  be  supplied  by  the  Western  Pacific  Corporation  as  above  provided 
it  will,  upon  the  consummation  of  the  Plan,  transfer  outright  to  the  New  Company: 

(4)  The  entire  capital  stock  of  The  Western  Realty  Company,  which  shall  represent  the 

assets  of  that  company  substantially  as  the  same  now  exist,  save  for  ordinary  opera- 
tions, such  assets  being  estimated  (see  Exhibit  6 attached)  to  have  a value  in  excess 

of  that  company’s  indebtedness  of  at  least $1,000,000.00 

and  to  be  accepted  as  equivalent  to  that  sum  as  a payment  on  account  of 
said  $10,000,000. 

(5)  700 — 70-ton  coal  cars  now  under  construction  which  it  has  ordered  for  the  purpose  of 

leasing  the  same  to  the  New  Company,  the  contract  price  wherefor  is  $1,389,500  and 

the  total  cost  of  completing  the  same,  with  all  specialties  attached,  is  estimated  to  be....  $1,500,000.00 

(6)  The  coupons  appertaining  to  the  Refunding  Bonds  to  be  purchased  by  it  as  provided 

hereby,  which  necessarily  will  represent  an  investment  of  at  least $622,000.00 

(7)  Any  and  all  additional  shares  of  stock  in  the  Rio  Grande  Junction  Railway  Company 

that  hereafter  shall  be  acquired  by  the  Western  Pacific  Corporation.  The  Corpora- 
tion is  entitled  under  an  existing  arrangement  to  acquire  the  remaining  shares  of  stock 
— not  already  owned  by  either  the  New  Company  or  that  Corporation — for  approx- 
imately the  sum  of $41,500.00 


It  will  at  the  same  time  deposit  with  The  Equitable  Trust  Company  of  New  York  cash  and/or  readily 
salable  securities  having  an  aggregate  realizable  value  of  $3,500,000;  Less:  (a)  any  amount  by  which  the 
cost  of  the  said  coal  cars,  the  surrendered  coupons  and  last  mentioned  Rio  Grande  Junction  Railway  Com- 
pany stock  shall  exceed  $2,163,500  (being  the  sum  of  the  above  items  5,  6 and  7),  and  ( b ) any  amounts 
additional  to  the  foregoing  which  the  Western  Pacific  Corporation  shall  have  paid  out  as  contemplated 
hereby  and  for  which  it  shall  be  entitled  to  credit  hereunder  upon  its  obligation  to  supply  $10,000,000  to 

the  New  Company.  To  this  deposit  will  be  added  the  amount  of  the  Utah  Fuel  Company  dividends  when 

and  as  above  provided.  The  principal  of  the  fund  so  to  be  deposited  with  The  Equitable  Trust  Company 

of  New  York  will  be  held  for  the  sole  purpose  of  securing  its  payment  to  the  New  Company  at  the  times  and 


6 


m the  amounts  required  by  this  Plan.  The  same  shall  be  invested  and  reinvested  in  securities  approved  by 
The  Equitable  Trust  Company  and  the  Western  Pacific  Corporation  acting  in  unison,  and  the  Western 
Pacific  Corporation  shall  be  entitled  to  all  income  and  gains,  if  any,  derived  therefrom  and  responsible  for 
all  losses  incurred  up  to  the  time  at  which  the  same  shall  be  paid  over  to  the  New  Company. 

At  the  time  of  the  final  payment  on  account  of  the  $10,000,000  to  be  supplied  by  the  Western  Pacific 
Corporation,  an  adjustment  shall  be  had  and  the  Western  Pacific  Corporation  shall  pay  to  the  New  Company 
any  amount  by  which  the  aggregate  of  the  sums  paid  or  accounted  for  hereunder  by  it  shall  be  less  than 
$10,000,000,  and  shall  be  entitled  to  the  repayment  to  it  from  said  deposited  fund  or  by  the  New  Company 
of  any  amount  by  which  such  aggregate  shall  exceed  $10,000,000. 


VIII. 

SECURITIES  TO  BE  AUTHORIZED  BY  THE  NEW  COMPANY. 

The  following  securities  are  to  be  authorized  by  the  New  Company: 

UNIFYING  MORTGAGE  BONDS. 

An  issue  of  Unifying  Mortgage  Bonds,  to  be  secured  by  a mortgage  which  will  be  a lien  (subject 
only  to  the  existing  liens  of  underlying  bonds)  on  the  properties  and  railways  of  the  New  Company  (including 
now  unencumbered  physical  property)  and  after-acquired  branches,  extensions  and  property  integrally 
connected  therewith,  and  all  property  acquired  by  use  of  the  proceeds  of  the  new  bonds  or  against  which 
new  bonds  shall  be  issued,  subject,  however  to  the  other  provisions  hereof  with  regard  to  said  mortgage 
and  the  lien  thereof.  Whenever  stock  of  the  Rio  Grande  Junction  Railway  Company  shall  be  released  from 
the  liens  of  the  Refunding  Mortgage  and  the  Adjustment  Mortgage,  the  same  shall  be  pledged  as  part  of  the 
security  under  the  Unifying  Mortgage,  or  the  property  of  the  Rio  Grande  Junction  Company,  subject  only  to 
the  liens  existing  thereon,  shall  be  subjected  to  the  lien  of  said  Mortgage.  The  amount  of  bonds  which  may 
be  issued  under  the  Unifying  Mortgage  will  be  unlimited.  They  may  be  issued  in  separate  series,  maturing 
on  the  same  or  different  dates  and  bearing  the  same  or  different  rates  of  interest  and  any  series  may  be 
made  redeemable  in  whole  or  in  part  at  times,  on  notice  and  at  premiums,  and  may  have  such  conversion 
privileges  and  other  provisions,  as  may  be  determined  by  the  Board  of  Directors  at  the  time  of  issue  of  such 
series. 

The  Unifying  Mortgage  will  contain  a provision  to  the  effect  that  in  the  event  that  (a)  bonds 
of  this  issue  are  used  to  refund  the  bonds  of  The  Rio  Grande  Western  Railway  Company  First  Consoli- 
dated Mortgage,  which  is  thereupon  satisfied,  and  at  the  time  of  such  satisfaction  the  stock  of  Utah  Fuel 
Company  shall  be  subject  to  that  mortgage,  or  ( b ) Unifying  Bonds  be  issued  to  supply  cash  to  redeem  such 
Utah  Fuel  Company  stock  from  the  lien  of  The  Rio  Grande  Western  Railway  Company  First  Consolidated 
Mortgage  or  to  acquire  The  Rio  Grande  Western  Railway  Company  First  Consolidated  Mortgage  Bonds 
used  to  effect  such  redemption,  the  Utah  Fuel  Company  stock  shall  forthwith  be  pledged  under  the  Unify- 
ing Mortgage  but  in  either  event  shall  be  subject  to  release  from  the  lien  of  that  Mortgage  (a)  on  the 
payment  to  the  Trustee  thereunder  of  $6,000,000  in  cash,  or  (b)  on  the  surrender  and  cancellation  of  bonds 
secured  by  the  Unifying  Mortgage  of  the  face  amount  of  $6,000,000  theretofore  actually  issued  and  out- 
standing, or  (c)  on  the  pledge  under  or  subjection  to  the  Unifying  Mortgage  of  other  securities  or  property 
(not  otherwise  subject  to  encumbrance)  having  a value,  established  in  such  manner  as  may  be  provided  in 
the  Unifying  Mortgage,  of  at  least  $6,000,000;  such  substituted  property  in  turn  to  be  redeemable  in  any 
manner  in  which  the  Utah  Fuel  Company  stock  might  have  been  redeemed  from  the  lien  of  such  mort- 
gage. Unless  and  until  Unifying  Mortgage  Bonds  or  the  proceeds  of  such  bonds  shall  be  used  for  the 
purpose  of  refunding  The  Rio  Grande  Western  Railway  Company  First  Consolidated  Mortgage  Bonds,  no 
right  to  or  lien  or  charge  upon  such  stock  shall  be  deemed  to  exist  or  to  be  created  in  favor  of  the  Trustee 
or  the  holders  of  Unifying  Mortgage  Bonds  or  of  the  Trustee  under  the  junior  Sinking  Fund  Mortgage 
next  mentioned  or  the  holders  of  bonds  to  be  issued  thereunder. 


7 


Unifying  Mortgage  Bonds  will  be  reserved  for  issue  as  follows : 

To  refund  Underlying  Bonds  and  Rio  Grande  Junction  Railway  Company  First  Mortgage  Bonds  to  a principal 
amount  equal  to  the  principal  amount  of  the  bonds  refunded  (including  redemption  of  Utah  Fuel  Company 

stock)  $81,112,000 

For  betterments,  improvements,  branches  and  extensions,  including  the  acquisition  of  bonds  and  stocks  of 
other  railway  lines  or  interests  in  other  railway  lines,  and  the  extinguishment  of  liens  thereon  issuable  to 
a principal  amount  equal  to  entire  cost  of  betterments,  etc 20,000,000 


The  remainder  to  be  issuable  for  the  same  purposes,  but  to  a principal  amount  equal  to  85%  of  cost  of  betterments,  etc. 

No  Bonds  are  to  be  issued  under  the  Unifying  Mortgage  except  for  refunding  purposes  or  for 
redemption  of  Utah  Fuel  Company  stock,  until  all  of  the  cash  to  be  supplied  by  the  Western  Pacific  Cor- 
poration under  Article  VII  hereof  has  been  paid  in. 

SINKING  FUND  BONDS. 

An  issue  of  Sinking  Fund  Bonds  to  be  limited  to  the  total  authorized  amount  of  $20,557,000* 
maturing  on  August  1,  1955,  (i.  e.  the  date  of  maturity  of  the  present  Refunding  Bonds)  and  bearing 
interest  payable  semi-annually  at  the  rate  of  five  per  cent.  (5%)  per  annum,  from  February  1,  1922;  or  from 
August  1,  1922,  in  case  the  coupon  on  the  Refunding  Bonds  due  on  that  date  shall  be  purchased  as  here- 
inafter provided.  They  will  be  secured  by  a junior  mortgage  subject  and  subordinate  to- the  Unifying 
Mortgage  and  co-extensive  therewith  as  to  property  and  rights  covered. 

The  Sinking  Fund  Mortgage  will  contain  a provision  to  the  effect  that,  in  the  event  that  a charge 
or  lien  upon  the  stock  of  the  Utah  Fuel  Company  shall  arise  in  favor  of  the  Trustee  under  the  Unifying 
Mortgage  (by  reason  of  the  provisions  of  that  mortgage  and  the  use  of  bonds  issued  thereunder  to  refund 
The  Rio  Grande  Western  Railway  Company  First  Consolidated  Mortgage  Bonds  or  to  obtain  the  release 
of  said  stock  from  the  said  First  Consolidated  Mortgage),  then  such  Utah  Fuel  Company  stock,  while 
subject  to  the  lien  of  such  Unifying  Mortgage,  shall  also  be  subject  to  the  Sinking  Fund  Mortgage,  but 
that  the  stock  may  be  redeemed  from  the  lien  of  the  Sinking  Fund  Mortgage  by  compliance  with  the 
provisions  for  release  contained  in  the  Unifying  Mortgage  without  any  payment  to  or  action  on  the  part 
of  the  Trustee  under  the  Sinking  Fund  Mortgage. 

The  Sinking  Fund  Mortgage  will  contain  further  provision  to  the  effect:  (a)  that  said  Sinking  Fund 
Bonds  shall  be  redeemable  in  whole  or  in  part  at  any  time  prior  to  a date  six  years  from  and  after  the  date  of 
said  mortgage,  at  their  face  amount  and  accrued  interest  and  thereafter  at  105  and  accrued  interest;  ( b ) for 
the  payment  by  the  New  Company  of  one  per  cent.  (1%)  each  year  on  the  aggregate  face  amount  of 
the  maximum  number  of  Sinking  Fund  Bonds  at  any  time  issued,  as  a sinking  fund,  the  same  to  be  pay- 
able only  out  of  the  earnings  of  the  year  but  next  after  payment  of  interest  upon  the  Sinking  Fund  Bonds 
and  applied  to  the  purchase,  either  at  public  or  private  sale  or  by  call  at  a price  not  exceeding  their 
then  callable  price,  of  Bonds  of  this  issue,  all  Bonds  purchased  or  called  for  the  Sinking  Fund  to  be 
kept  alive  and  the  interest  paid  thereon  from  time  to  time  to  be  added  to  the  Sinking  Fund  and  applied 
in  the  same  manner,  which  sinking  fund  payments  shall  become  cumulative  at  the  expiration  of  three  years 
from  the  date  of  the  Sinking  Fund  Mortgage;  ( c ) that  in  the  event  that  the  Utah  Fuel  Company  stock  shall  be 
redeemed  by  the  use  of  moneys  derived  from  the  sale  of  Preferred  Stock  of  the  New  Company,  with  the 
result  that  the  benefit  arising  therefrom  shall  accrue  to  anyone  other  than  the  New  Company  or  a successor 
or  subsidiary  thereof,  the  New  Company  shall  pay  annually  into  the  Sinking  Fund  out  of  its  net  earnings, 
over  and  above  amounts  thereof  required  for  payment  of  dividends  upon  its  Preferred  Stock,  an  additional 
amount  of  $240,000,  the  obligation  to  make  such  payment  to  be  cumulative;  and  ( d ) that  the  New  Com- 
pany shall  not  effect  the  redemption  of  the  stock  of  the  Utah  Fuel  Company  from  the  lien  of  The  Rio 
Grande  Western  Railway  Company  First  Consolidated  Mortgage,  with  the  result  that  the  benefit  arising 
from  such  release  shall  accrue  to  anyone  other  than  the  New  Company,  except  in  a manner  and  with 
the  effect  hereinabove  in  Article  VIII  of  this  Plan  provided,  save  by  means  of  moneys  which  would 
otherwise  be  distributable  consistently  with  the  provisions  of  this  Plan  as  dividends  upon  common  stock 
of  the  New  Company  or  by  use  of  moneys  to  be  supplied  by  the  Western  Pacific  Corporation  (or  a suc- 


8 


cessor  in  interest  or  subsidiary  thereof)  in  addition  to  the  moneys  to  be  supplied  as  hereinabove  provided, 
which  additional  moneys  so  supplied  shall  be  capitalized,  if  at  all,  in  common  stock  of  the  New  Company. 


The  Sinking  Fund  Bonds  will  be  applied  as  follows: 

In  exchange  for  Refunding  Bonds,  (maximum) $15,557,000 

Maximum  permitted  to  be  used  in  whole  or  in  part  in  exchange  for  Adjustment  Bonds 5,000,000* 

Total  $20,557,000* 


But  Sinking  Fund  Bonds  may  be  issued  only  to  an  amount  not  exceeding  fifty  per  cent.  (50%)  of  the  face  amount  of 
the  Refunding  Bonds  and  Adjustment  Bonds  so  exchanged  and  interest  upon  Adjustment  Bonds  accrued  and  unpaid. - 

* These  amounts  may  be  increased  by  any  amount  of  Sinking  Fund  Bonds  allowed  in  satisfaction  of  accrued  and  unpaid 
interest  upon  Adjustment  Bonds. 


PREFERRED  STOCK. 

An  authorized  issue  of  not  exceeding  $50,000,000  divided  into  500,000  shares  of  the  par  value  of 
$100  each.  The  holders  of  Preferred  Stock  will  be  entitled  to  receive  out  of  the  surplus  net  profits  of  the 
corporation,  when  and  as  declared  by  the  Board  of  Directors,  dividends  at  the  rate  of  but  not  exceeding 
seven  per  cent.  (7%)  per  annum,  payable  quarterly,  in  preference  to  any  payment  of  dividends  on  the 
Common  Stock,  which  dividends  shall  be  cumulative  so  that  if  dividends  at  said  rate  shall  not  have  been 
paid  upon  the  preferred  stock  for  any  dividend  period,  the  deficiency  shall  be  declared  and  paid  or  set  aside 
in  cash  for  payment  before  any  dividends  shall  be  declared  or  paid  on  the  Common  Stock.  No  dividend 
shall  be  declared  or  paid  on  the  Common  Stock  for  any  year,  unless  all  dividends  upon  the  Preferred  Stock 
accrued  prior  to  such  year  and  the  full  dividend  thereon  for  such  year  shall  have  been  paid  or  declared  and 
set  aside  for  payment  in  such  year.  Cumulative  dividends  upon  the  Preferred  Stock  shall  begin  to  accrue 
from  February  1,  1922;  or  from  August  1,  1922,  in  case  the  coupon  on  the  Refunding  Bonds  due  on  the 
last  mentioned  date  shall  be  purchased  as  hereinafter  provided. 

In  the  event  of  the  dissolution,  winding  up  or  liquidation  otherwise  of  the  corporation,  the  holders 
of  the  Preferred  Stock  shall  be  entitled  to  receive,  out  of  the  assets  of  the  corporation,  the  par  value  of 
their  shares  and  also  an  amount  equivalent  to  all  dividends  thereon  accrued  and  unpaid  and  an  additional 
amount  equal  to  a dividend  at  the  rate  of  seven  per  cent.  ( 7 %)  per  annum  from  the  last  dividend  date  to 
the  date  as  of  which  distribution  shall  be  made,  before  any  distribution  shall  be  made  to  the  holders  of 
the  Common  Stock,  but  shall  not  be  entitled  as  the  holders  of  such  Preferred  Stock  to  share  in  any  assets 
of  the  corporation  thereupon  remaining. 

The  Preferred  Stock  is  to  be  redeemable  at  the  option  of  the  corporation,  in  whole  or  in  part,  upon 
at  least  sixty  (60)  days’  notice  of  an  intention  to  redeem  the  same,  at  any  time  prior  to  January  1,  1926, 
at  par  and  accrued  and  unpaid  dividends  and  at  any  time  thereafter  at  110%  of  its  par  value,  and  in  any 
case  with  an  additional  amount  equal  to  a dividend  at  the  rate  of  seven  per  cent.  (7%)  per  annum  from 
the  last  dividend  date  to  the  date  of  such  redemption. 

The  Preferred  Stock  is  not  to  be  entitled  to  any  voting  rights  except  as  required  by  statute  and  as 
hereinafter  provided : 

The  holders  of  Preferred  Stock  shall  at  all  times  have  the  right  to  vote  on  a parity  with  holders  of  the  Common 
Stock  (each  share  of  either  class  being  entitled  to  one  vote)  upon  (1)  any  proposition  to  sell,  pledge  or  in  any 
manner  dispose  of  any  part  of  the  stock  (except  directors’  shares)  of  the  Rio  Grande  Junction  Railway  Company 
owned  by  the  corporation,  and  (2)  on  any  proposition  to  lease,  sell  or  create  a mortgage  (not  including,  however, 
the  mortgages  contemplated  by  this  Plan)  upon,  the  railway  system  of  the  New  Company  or  any  essential  part 
thereof,  or  (3)  upon  any  proposition  to  increase  the  authorized  amount  of  Preferred  Stock.  In  case  the  New 
Company  shall  on  any  quarterly  dividend  date  fail  to  pay  a quarterly  instalment  of  dividend  on  the  Pre- 
ferred Stock  and  such  instalment  shall  remain  unpaid  for  a period  of  one  year  thereafter,  the  holders  of 
Preferred  Stock  shall  have  the  right  at  all  stockholders’  meetings  to  vote  on  a parity  with  the  holders  of 
the  Common  Stock,  which  right  shall  continue  until,  but  only  until,  such  time  as  all  accrued  dividends  on  the 
Preferred  Stock  in  default  and  the  two  next  subsequent  quarterly  dividends  shall  have  been  paid  or  set  aside  in 
cash  for  payment.  Provision  will  be  made  to  the  effect  that  during  any  period  when  the  holders  of  the  Preferred 
Stock  shall  have  the  right  to  vote  upon  the  election  of  directors,  such  elections  shall  be  by  a system  of  cumulative 
voting,  similar  so  far  as  possible  to  the  system  of  cumulative  voting  defined  in  the  Corporation  Raws  of  the 
State  of  Delaware. 


9 


The  Preferred  Stock  is  to  be  applied  as  follows : 

To  be  issued  in  exchange  for  Refunding  Bonds  (maximum) . 

Maximum  permitted  to  be  used  in  exchange  for  principal  of  Adjustment  Bonds 

(Amount  will  be  diminished  by  principal  amount  of  Sinking  Fund  Bonds  issued  in  exchange  for  Adjust- 
ment Bonds.) 

To  be  reserved  for  adjustment  of  interest  upon  Adjustment  Bonds  and  for  future  corporate  purposes 
(minimum)  


COMMON  STOCK. 


$15,557,000 

10,000,000 


24,443,000 

$50,000,000 


An  authorized  issue  of  not  exceeding  400,000  shares,  with  or  without  par  value,  which  may  be 
increased  only  in  consideration  of  money  or  property,  paid  or  transferred,  to  the  New  Company  in  excess  of 
money  and  property  already  paid  and  transferred  and  to  be  paid  or  transferred  as  required  by  this  Plan. 

In  the  event  that  it  shall  prove  impracticable  legally  or  inconsistent  with  the  purposes  of  this  Plan  to 
issue  stock  of  the  New  Company  without  par  value,  the  Western  Pacific  Corporation  shall  have  the  right, 
subject  to  the  limitation  of  the  number  of  shares  above  provided,  to  cause  Common  Stock  having  a par 
value  of  $100  per  share  or  any  less  par  value  to  be  issued  in  place  of  the  Common  Stock  without  par  value 
issuable  as  provided  for  herein,  and  in  that  event  each  share  of  such  Common  Stock,  although  of  par  value 
less  than  $100,  shall  have  the  same  vote  (whenever  shares  of  Preferred  Stock  shall  be  entitled  to  vote)  as 
any  share  of  Preferred  Stock,  although  the  latter  be  of  greater  par  value  than  such  shares  of  Common 
Stock.  Such  Common  Stock  may,  subject  to  the  limitation  aforesaid,  be  issued  to  such  aggregate  amount 
as  the  Western  Pacific  Corporation  may  determine,  with  the  approval  of  such  governmental  bodies,  if  any, 
as  may  have  jurisdiction  in  the  premises. 

The  Common  Stock  is  to  be  applied  as  follows: 

To  be  issued  to  the  Western  Pacific  Corporation  in  consideration  of  the  acquisition  by  the  New  Company 
of  the  properties  of  the  existing  The  Denver  and  Rio  Grande  Western  Railroad  Company  (or  if  said 


existing  Company  be  employed  as  the  New  Company,  the  shares  thereof  already  issued  to  the  Western 

Pacific  Corporation  will  be  retained  by  it) 300,000  Shares 

To  be  issued  to  the  Western  Pacific  Corporation  for  cash  to  be  supplied  by  it  as  provided  in  Article 

VII  hereof  100,000  Shares 

Total  400,000  Shares 


IX. 

TREATMENT  OF  REFUNDING  BONDS  AND  ADJUSTMENT  BONDS. 

Holders  of  such  Certificates  of  Deposit  for  Refunding  Bonds  as  shall  have  been  issued  under  or 
become  bound  by  this  Plan,  who  shall  have  complied  with  the  conditions  of  the  Plan  and  Agreement,  will  be 
entitled  on  the  completion  of  the  reorganization  and  surrender  of  their  Certificates  of  Deposit  in  negotiable 
form  together  with  such  certificates,  if  any,  as  may  be  required  under  Federal  or  State  Income  Tax  Laws,  to 
receive 

For  each  $1,000  principal  amount  of  Refunding  Bonds 

$500  principal  amount  of  Five  Per  Cent.  Sinking  Fund  Bonds 
$500  par  value  of  Seven  Per  Cent.  Cumulative  Preferred  Stock. 

Upon  such  exchange  the  Western  Pacific  Corporation  will  pay  in  cash  the  amount  of  any  coupons  on 
the  Sinking  Fund  Bonds  exchanged  which  may  have  become  due  on  or  prior  to  that  date,  and  shall  be 
entitled  to  credit  for  any  amount  so  paid  on  account  of  its  obligation  to  supply  cash  to  the  New  Company 
as  provided  in  Article  VII  hereof. 

There  may  be  made  to  holders  of  Adjustment  Bonds  (including  the  Western  Pacific  Corporation) 
(a)  a like  offer  of  the  privilege  of  exchanging  their  bonds  in  the  same  event  for  50%  thereof  (includ- 
ing principal  and  interest  accrued  and  unpaid)  in  Sinking  Fund  Bonds  and  50%  (including  principal 
and  interest  accrued  and  unpaid)  thereof  in  Preferred  Stock,  or  ( b ) an  offer  of  Preferred  Stock  only, 
or  ( c ) an  offer  of  such  stock  together  with  less  than  50%  of  Sinking  Fund  Bonds,  as  the  Western 


10 


Pacific  Corporation  may  elect;  provided,  however,  that  the  holders  of  Adjustment  Bonds  shall  not  receive 
securities  of  a par  and/or  face  value  in  excess  of  the  principal  amount  of  the  Adjustment  Bonds  so  exchanged 
and  of  the  interest  thereon  accrued  and  unpaid. 

The  Western  Pacific  Corporation  has  issued  its  Ten-Year  4%  Promissory  Notes  in  exchange  for 
Adjustment  Bonds,  and  upon  or  simultaneously  with  the  exchange  of  the  Refunding  Bonds  under  this  Plan 
will  convert  such  Adjustment  Bonds  into  Sinking  Fund  Bonds  and/or  Preferred  Stock  of  the  New  Com- 
pany as  may  be  permitted  to  other  holders  of  Adjustment  Bonds. 

X. 

UNDERWRITING  SYNDICATE. 

It  is  expected  that  the  money  required  to  pay  distributive  shares  of  non-assenting  Refunding  and 
Adjustment  Bonds  will  be  furnished  by  an  Underwriting  Syndicate,  which  may  receive  therefor  the 
amounts  of  bonds  and  preferred  stock  of  the  New  Company  to  which  the  holders  of  such  non-assenting 
Bonds  would  have  been  entitled  under  the  Plan,  and  such  Syndicate  compensation,  payable  by  the  New 
Company,  as  may  be  agreed  upon  by  the  Western  Pacific  Corporation  and  the  Committee.  Members  of 
the  Committee,  or  the  firms  to  which  they  respectively  belong,  as  well  as  the  Western  Pacific  Corpora- 
tion, may  participate  in  any  such  syndicate,  and  in  any  compensation,  commission,  profit  or  other  benefit 
accruing  to  such  syndicate  or  in  connection  with  the  formation  or  management  thereof. 

XI. 

METHODS  TO  BE  PURSUED  IN  REORGANIZATION. 

The  Western  Pacific  Corporation  and  the  Committee  will  cooperate  to  carry  this  Plan  into  execu- 
tion, but  the  instrumentalities  and  methods  to  be  employed  to  that  end  and  to  provide  for  the  issuance 
of  the  new  securities  called  for  thereby  are  to  be  determined  by  the  Western  Pacific  Corporation,  pro- 
vided that  the  same  shall  be  consistent  in  substance  with  the  accomplishment  of  the  results  contemplated 
by  this  Plan. 

The  validity  and  sufficiency  of  the  securities  of  the  New  Company  to  be  received  by  the  holders  of 
the  Refunding  Bonds,  and  the  legality  of  the  proceedings  authorizing  the  same,  as  well  as  the  provisions 
relating  to  the  Preferred  Stock  in  the  Certificate  or  Amended  Certificate  of  Incorporation  of  the  New 
Company,  the  provisions  of  the  Unifying  Bonds,  the  Sinking  Fund  Bonds  and  the  mortgages  securing 
the  same,  and  the  form  of  all  thereof,  shall  be  subject  to  the  approval  of  the  counsel  of  the  Committee. 

The  Committee  will,  upon  the  Plan’s  being  declared  operative,  take,  and  permit  the  Western  Pacific 
Corporation  to  take,  all  such  action  with  respect  to  the  Refunding  Bonds  subjected  to  the  plan  as  may  be 
reasonably  necessary  or  proper  in  order  to  carry  out  the  Plan ; and  for  such  purpose  the  Committee  will, 
take  all  such  action,  as  a holder  of  Refunding  Bonds  or  otherwise,  as  may  be  reasonably  necessary  and  as  may 
be  authorized  or  required  by  the  provisions  of  the  Refunding  Mortgage  in  order  to  initiate  and  direct  such 
action  by  the  Trustee  under  said  Mortgage  as  the  case  may  require  with  respect  to  the  declaration  of  the 
maturity  of  the  Refunding  Bonds  or  the  waiver  of  such  declaration,  the  initiation  and  prosecution  of  fore- 
closure proceedings  and  proceedings  incidental  or  collateral  thereto,  the  purchase  of  mortgaged  property, 
payment  and  collection  of  the  purchase  price,  entry  and  enforcement  of  a deficiency  judgment  and  any  other 
action  which  the  Trustee  under  the  Mortgage  may  be  authorized  to  take  or  cause  to  be  taken. 

In  the  event  that  the  property  subject  to  the  lien  of  the  Refunding  Mortgage  shall  be  sold  in  any 
suit  or  judicial  proceeding  and  a right  shall  exist  to  apply  in  payment  of  the  purchase  price  thereof  Refund- 
ing Bonds  and/or  coupons  appurtenant  thereto  to  the  extent  of  the  distributive  shares  of  the  purchase  price 
to  which  the  holders  of  such  bonds  and/or  coupons  may  be  entitled,  respectively,  or  any  part  thereof,  the 
Committee  shall  make  available  for  use  by  any  purchaser  or  purchasers  of  said  property  acting 
under  this  Plan  in  the  interest  or  for  the  benefit  of  the  New  Company  any  and  all  Refunding  Bonds  and 
coupons  which  are  bound  by  the  Plan  and  under  the  control  of  the  Committee,  and  in  that  event  the  provi- 
sions hereof  with  respect  to  the  exchange  of  bonds  and  stock  therefor  shall  apply  to  said  bonds  and  coupons 
to  the  same  extent  as  if  no  part  of  such  purchase  price  had  been  credited  thereon. 


11 


If  and  as  soon  as  the  ultimate  success  of  the  Plan  in  the  opinion  of  counsel  for  the  Committee  shall 
be  assured,  the  Committee  shall  take  or  cause  to  be  taken  such  measures  within  its  powers,  as  may  be  appro- 
priate and  requested  by  the  Western  Pacific  Corporation,  to  procure  the  recognition  by  Guaranty  Trust 
Company  of  New  York  as  Trustee  under  the  First  Consolidated  Mortgage  of  The  Rio  Grande  Western 
Railway  Company,  and  generally,  of  the  Western  Pacific  Corporation  as  the  owner  of  the  stock  of  the  Utah 
Fuel  Company  subject  only  to  the  pledge  thereof  under  said  First  Consolidated  Mortgage,  or,  upon  the 
conditions  expressed  in  this  Plan,  to  the  lien  of  the  mortgages  to  be  created  by  the  New  Company  and 
as  entitled  to  the  dividends  on  said  stock  already  received  by  it  mentioned  in  Article  VII  hereof. 

Pending  the  carrying  out  of  this  Plan,  the  Western  Pacific  Corporation  shall  be  under  no  obligation 
to  advance  any  moneys  whatever  to  the  New  Company.  In  the  event,  however,  that  it  shall  advance  moneys 
pending  the  complete  execution  of  the  Plan,  the  same  shall  constitute  an  indebtedness  in  open  account,  or 
the  New  Company,  if  legally  authorized,  may  execute  its  note  or  notes  or  other  obligations  therefor,  securing 
the  same  as  may  be  agreed  between  it  and  the  Western  Pacific  Corporation.  Upon  the  complete  execution 
of  the  Plan,  any  notes  or  other  obligations  so  received  by  the  Western  Pacific  Corporation  shall  be  can- 
celled and  the  security  therefor  returned. 

The  Western  Pacific  Corporation  shall  be  entitled  to  credit  against  its  obligation  to  supply  $10,000,000 
under  Article  VII  hereof  for  any  advances  which  it  may  so  make  to  the  New  Company  or  to  any  receiver 
of  the  railway  properties  or  for  the  payment  of  interest  or  the  purchase  of  coupons  upon  bonds  of  the 
Old  Denver  Company  other  than  Adjustment  bonds  or  the  payment  of  expenses  of  reorganization  (including 
expenses  already  incurred  but  not  paid,  not  exceeding  in  the  aggregate  $100,000,  on  account  of  the  transfer 
of  the  railway  properties  to  The  Denver  and  Rio  Grande  Western  Railroad  Company)  or  otherwise  in  order 
to  carry  through  the  reorganization ; but  in  the  event  that  it  shall  become  entitled  to  such  credit  on  account 
of  advances  for  the  payment  of  interest  or  the  purchase  of  coupons  upon  bonds  of  the  Old  Denver  Com- 
pany, no  dividend  upon  the  common  stock  of  the  New  Company  held  by  the  Western  Pacific  Corporation 
shall  be  declared  or  paid  until  there  shall  have  been  realized  from  income  and  capitalized  in  common  stock 
of  the  New  Company  an  amount  equal  to  the  last-mentioned  credit.  If  desirable  in  the  interest  of  this 
Plan  that  pending  its  consummation  money  should  be  invested  in  stock  representing  the  ownership  of  or 
bonds  secured  by  lien  upon  property  to  be  owned  by  the  New  Company  or  in  any  additions,  extensions, 
equipment,  motive  power  or  other  facilities  or  property  requisite  for  the  New  Company,  and  if,  the 
Western  Pacific  Corporation  shall,  with  the  approval  of  the  Committee,  have  supplied  money  for  any  such 
purpose,  the  Western  Pacific  Corporation  shall  be  entitled  to  a like  credit  for  the  amounts  so  supplied  upon 
the  transfer  to  the  New  Company  of  the  bonds  or  property  so  acquired  or  the  avails  thereof  if  previously 
realized  with  the  approval  of  the  Committee. 

The  Committee  shall  not  be  obliged  to  take  any  action  hereunder  except  to  the  extent  that  its  counsel 
may  advise  it  that  it  may  do  so  properly  and  consistently  with  its  trust,  nor  shall  it  be  obliged  to  take  any 
action  hereunder  which  may  tend  to  involve  it  in  expense  or  liability  unless  supplied  with  cash  to  meet  the 
same  or  indemnified  therefor  to  its  satisfaction.  Neither  the  Committee  nor  the  Western  Pacific  Corpora- 
tion shall  be  liable  for  anything  which  it  may  in  good  faith  do  or  omit  to  do  in  connection  with  or  incidental 
to  the  carrying  out  of  this  Plan,  nor  shall  any  member  of  the  Committee  nor  any  officer  or  director  of 
the  Western  Pacific  Corporation,  nor  any  one  charged  with  any  function  with  respect  to  the  carrying  out 
of  this  Plan  be  subject  to  any  personal  liability  on  account  of  anything  whatsoever  done  or  omitted  by 
him  in  connection  with  or  incidental  thereto. 

XII. 

PROVISION  AS  TO  COSTS  AND  EXPENSES  OF  COMMITTEE. 

In  the  event  that  the  Plan  is  approved  and  adopted  by  the  Committee  and  the  Committee  shall 
take  such  action  in  accordance  with  the  Deposit  Agreement  under  which  it  is  constituted  as  may  be 
required  by  such  Agreement  to  make  this  Plan  effective  and  binding  on  holders  of  Certificates  of 
Deposit  under  such  Agreement,  then  and  in  such  case  if  holders  of  Certificates  of  Deposit  shall  not  assent 
thereto  to  an  amount  sufficient  to  make  the  Plan  binding  and  effective  as  provided  in  said  Deposit  Agree- 
ment or  in  case,  having  become  binding  and  effective  upon  holders  of  Certificates  of  Deposit,  the  Plan  shall 


12 


not  be  consummated,  the  Western  Pacific  Corporation  will  nevertheless  pay  all  of  the  reasonable  expenses 
and  disbursements  heretofore  incurred  and  that  may  be  hereafter  incurred  up  to  the  time  that  it  shall 
have  been  determined  that  the  Plan  will  not  become  binding  and  effective  as  provided  in  said  Deposit 
Agreement  or  will  not  be  consummated,  whether  or  not  the  expenses  heretofore  incurred  by  the  Com- 
mittee shall  have  been  incurred  in  connection  with  this  Plan  (except  such  part  thereof  as  may  be  assessed 
by  the  Committee  against  and  paid  by  non-assenting  holders  of  Certificates  of  Deposit),  and  also,  if  the 
Committee  shall  thereupon  return  the  deposited  bonds  to  the  depositors,  the  reasonable  expenses  and 
disbursements  of  the  Committee  in  connection  with  such  return  so  that  the  said  bonds  may  be  returned  free  of 
charge  to  the  depositors.  In  the  event  that  the  Plan  shall  be  consummated,  the  Western  Pacific  Corporation 
will  pay  the  reasonable  expenses  and  disbursements  of  the  Committee  as  above  specified  and  also  reasonable 
compensation  of  the  several  members  (past,  present  and  future)  of  the  Committee. 

In  the  latter  event,  the  Western  Pacific  Corporation  shall  be  entitled  to  credit  for  any  amount  so 
paid  on  account  of  its  obligation  to  supply  cash  to  the  New  Company  as  provided  in  Article  VII  hereof. 

XIII. 

PURCHASE  OF  DEFAULTED  COUPONS. 

In  case  default  shall  be  made  in  the  payment  of  the  coupons  upon  the  Refunding  Bonds  due  on 
February  1,  1922,  the  Western  Pacific  Corporation  will  on  that  date  purchase  or  cause  to  be  purchased 
such  February  coupon  belonging  to  each  Refunding  Bond  which  shall  then  have  become  bound  by  or  shall 
have  been  deposited  under  this  Plan,  and  from  time  to  time  thereafter  as  further  Refunding  Bonds  shall 
become  bound  by  or  be  deposited  under  this  Plan,  will  purchase  or  cause  to  be  purchased  such  February 
coupons  belonging  thereto. 

In  case  the  Plan  is  declared  or  shall  become  and  shall  be  operative  and  default  shall  occur  in  the 
payment  of  the  coupons  upon  the  Refunding  Bonds  due  August  1,  1922,  the  Western  Pacific  Corpora- 
tion will,  on  that  date,  purchase  or  cause  to  be  purchased,  such  August  coupon  belonging  to  each  deposited 
Refunding  Bond,  if  requested  so  to  do  by  the.  Committee. 

The  moneys  so  expended  shall  be  deemed  a cost  incurred  for  the  purposes  of  the  Plan  and  the 
Western  Pacific  Corporation  shall  be  entitled  to  credit  therefor  on  account  of  the  first  installment  of 
cash  to  be  supplied  by  it  to  the  New  Company  as  provided  in  Article  VII  hereof. 

XIV. 

PROVISION  FOR  DECLARING  PLAN  OPERATIVE. 

The  Plan  shall  not  become  operative,  unless  the  Western  Pacific  Corporation  and  the  Committee 
shall  otherwise  agree,  unless  the  holders  of  at  least  fifty  per  cent.  (50%)  of  the  outstanding  Refund- 
ing Bonds,  not  including  bonds  on  deposit  under  the  Adjustment  Mortgage  nor  bonds  held  in  the  sinking 
fund  under  the  Refunding  Mortgage  nor  bonds  held  in  the  treasury  of  the  New  Company,  shall 
become  bound  by  the  Plan  on  or  before  May  28,  1922,  or  a later  date  fixed  by  agreement  between  the 
Committee  and  the  Western  Pacific  Corporation;  and  if  the  holders  of  more  than  fifty  per  cent.  (50%) 
and  less  than  eighty  per  cent.  (80%)  of  the  Refunding  Bonds  as  above  specified  shall  become  bound  by 
the  Plan  prior  to  that  date  (or  a later  date  fixed  by  agreement  as  aforesaid),  the  Plan  may  be  declared 
operative  by  the  Western  Pacific  Corporation  by  written  notice  to  that  effect  given  to  the  Committee, 
and  in  the  same  event,  upon  the  giving  of  such  notice,  the  Plan  shall  thereupon  become  operative ; but 
if  the  holders  of  eighty  per  cent.  (80%)  of  the  Refunding  Bonds  as  above  specified  shall  become  bound 
by  the  Plan  prior  to  that  date  (or  a later  date  fixed  by  agreement  as  aforesaid),  the  Plan  may  be  declared 
operative  by  either  the  Western  Pacific  Corporation  or  the  Committee  by  written  notice  to  that  effect  given 
to  the  other  party,  and  in  the  same  event,  upon  the  giving  of  such  notice  to  either  party,  the  Plan  shall 
thereupon  become  operative. 

If  the  Plan  in  its  original  form,  or  as  modified,  shall  not  become  or  be  declared  operative  prior 
to  the  28th  day  of  May,  1922  (or  any  later  date  which  may  be  fixed  by  agreement  between  the  Western 


13 


Pacific  Corporation  and  the  Committee),  or  if,  having  been  declared  operative,  it  shall  be  abandoned  as 
permitted  hereby,  neither  the  Committee  nor  the  Western  Pacific  Corporation  thereafter  shall  be  under 
any  further  obligation  (except  as  herein  otherwise  expressly  provided)  by  reason  of  having  become  a 
party  thereto,  and  the  fact  of  their  having  become  parties  hereto  shall  be  without  prejudice  to  their  respec- 
tive rights  in  the  premises,  nor  shall  anything  herein  contained  operate  or  be  construed  as  an  admission  by 
either  of  them. 

In  the  event  that,  although  the  Plan  shall  have  become  operative,  (a)  it  shall,  nevertheless,  be 
established  at  any  time  that  it  will  be  impracticable  to  carry  out  the  same  so  as  to  obtain  in  substantial 
effect  the  results  contemplated  hereby,  or  ( b ) on  December  31,  1922,  the  carrying  out  of  the  Plan  in 
the  sense  aforesaid  shall  not  be  practically  assured  (time  reasonably  sufficient  therefor  being  allowed),  the 
Western  Pacific  Corporation  and  the  Committee  acting  together,  (or  if  on  July  15,  1923,  the  Plan  shall 
not  have  been  fully  carried  out  in  fact,  then  either  the  Western  Pacific  Corporation  or  the  Committee, 
acting  alone)  shall  have  the  right  to  declare  the  Plan  abandoned. 

The  carrying  out  of  the  Plan  is  subject  to  its  approval  by  the  Interstate  Commerce  Commission 
and  by  any  other  Governmental  bodies,  the  approval  whereof  may  be  required  by  law. 

Whenever  reference  is  made  in  Plan  and  Agreement  to  the  “complete  execution’’  or  the  “carry- 
ing out”  or  the  “consummation”  of  the  Plan,  or  any  equivalent  or  similar  expression  is  employed,  such 
expression  contemplates,  among  other  things,  either  (a)  the  actual  extinguishment  of  the  Refunding  and 
Adjustment  Bonds  and  the  vesting  of  the  property  of  the  existing  company,  The  Denver  and  Rio  Grande 
Western  Railroad  Company,  in  the  New  Company  (or  its  retention  by  The  Denver  and  Rio  Grande 
Western  Company,  as  the  case  may  be),  free  from  the  lien  of  the  mortgages  securing  said  Bonds,  or  ( b ) 
the  substantial  accomplishment  of  that  result  by  some  other  method  to  be  agreed  upon  by  the  Western 
Pacific  Corporation  and  the  Committee. 


XV. 

MODIFICATIONS  OF  PLAN. 

This  Plan  may  from  time  to  time  be  modified  in  such  particulars  as  may  be  agreed  upon  by  the  Western 
Pacific  Corporation  and  the  Committee.  In  the  event  of  any  such  modification  a copy  of  the  agreement 
so  made,  setting  forth  such  modification,  or  of  the  Plan  as  so  modified,  shall  thereupon  be  filed  with  the 
Bankers  Trust  Company  as  Depositary.  In  case  of  any  modification  of  the  Plan,  which  in  the  judgment  of 
the  Committee  shall  adversely  affect  the  holders  of  Certificates  of  Deposit  to  a material  degree,  notice  of 
the  fact  of  such  filing  shall  be  given  and  the  assent  thereto  of  holders  of  Certificates  of  Deposit  shall  be 
obtained  in  the  manner  and  with  the  effect  provided  in  the  Agreement  hereto  annexed. 


XVI. 

STATEMENTS  CONTAINED  IN  PLAN. 

The  attached  Exhibits  1 to  4,  inclusive,  have  been  furnished  to  the  Committee  by  the  Western  Pacific 
Corporation,  which  caused  the  same  to  be  compiled  from  statements  rendered  by  the  Receivers  of  the  Old 
Denver  Company  and  by  the  New  Company. 

The  statements  and  figures  contained  in  the  Plan  and  the  Exhibits  annexed  thereto  have  been  com- 
piled from  sources  believed  to  be  trustworthy.  Certain  of  these  statements  and  figures  are  necessarily  only 
approximate.  No  statement,  estimate,  explanation  or  suggestion  contained  in  the  Plan  and  Agreement  or 
the  said  Exhibits  or  in  any  circular  or  letter  issued  or  which  hereafter  may  be  issued  by  the  Western  Pacific 
Corporation  or  by  the  Committee  or  by  the  Depositary  or  any  Sub-depositary,  or  by  anyone  representing  or 
purporting  to  represent  any  of  them,  is  or  is  to  be  deemed  to  be  a warranty  or  representation  or  a condition 
of  any  deposit  under  or  assent  to  the  Plan,  and  no  error,  defect  or  irregularity  shall  release  any  depositor 
under  the  Plan  and  Agreement  or  affect  or  release  any  assent  thereto  or  affect  any  action  taken  pursuant 
thereto,  except  by  written  consent  of  the  Western  Pacific  Corporation  and  the  Committee. 


14 


EXHIBITS 


15 


Exhibit  1. 


CAPITALIZATION  AND  FIXED  CHARGES. 
COMPARISON. 


Oed  Denver  Company. 

New  Company  upon  Completion  oe 

Plan. 

Outstanding. 

$79,112,000 

2,000,000 

Underlying  Bonds  as  per 

page  4 hereof  

R.  G.  Junction  First  Mort- 
gage Bonds  (See  page 
4)  

Fixed 

Charge. 

$3,279,740 

100,000 

Outstanding. 

$79,112,000 

2,000,000 

Underlying  Bonds  as  per 

page  4 hereof  

R.  G.  Junction  First  Mort- 
gage Bonds  (See  page 
4)  

Fixed 

Charge. 

$3,279,740 

100,000 

31,114,0*00 

Refunding  Bonds 

1,555,700 

Unifying  Mortgage  Bonds 

10,000,000 

Adjustment  Bonds 

700,000 

20,557,000 

Sinking  Fund  Bonds 

Sinking  Fund  Annual  In- 

1,027,850 

$122,226,000 

2,830,000 

Total  in  hands  of  public.. 
Refunding  Bonds  in  Sink- 
ing Fund 

Refunding  Mortgage  Sink- 
ing Fund  Annual  In- 
stallment   

$5,635,440 

141,500 

120,000  ■ 

stallment  

205,570 

$125,056,000 

49,775,670 

38,000,000 

$212,831,670 

Total  Bonded  Debt 

Preferred  Stock 

$5,896,940 

$101,669,000 

$20,557,000 

Total  Bonded  Debt 

Preferred  Stock 

$4,613,160 

Common  Stock 

Total  Capitalization 

$5,896,940 

Common  Stock  (400,000 
shares  without  par  value) 

Reduction  in  Bonded  Debt. 

Old  Denver  Company  Bonded  Debt $125,056,000 

New  Company  Bonded  Debt 101,669,000 

Total  Reduction  in  Bonded  Debt $23,387,000 

Reduction  in  Fixed  Charges. 

Old  Denver  Company  Fixed  Charges $5,896,940 

New  Company  Fixed  Charges 4,613,160 

Total  Reduction  in  Fixed  Charges $1,283,780 


Note  1.  The  foregoing  tabulation  sets  forth  the  capitalization  of  the  Old  Denver  Company  as  of  November  20,  1920, 
being  the  date  of  the  sale  in  the  receivership  proceedings,  except  that  the  amount  of  the  Refunding  Bonds  outstanding  and  in 
the  Sinking  Fund  has  been  inserted  as  of  the  date  hereof.  The  interest  on  the  Adjustment  Bonds  has  been  included  as 
a fixed  charge,  because,  although  payable  annually  out  of  income  only,  it  is  cumulative  and  payable  in  full  upon  maturity 
or  prior  declaration  of  the  Bonds.  The  capitalization  of  the  New  Company  is  made  up  as  of  the  date  of  the  consumma- 
tion of  the  Plan,  upon  the  theory  that  all  of  the  Refunding  Bonds  are  exchanged  as  contemplated  by  the  Plan  and 
that  all  the  Adjustment  Bonds  are  also  exchanged  upon  the  like  basis,  but  without  making  allowance  for  additional 
Sinking  Fund  Bonds  and  Preferred  Stock  which  may  be  issued  in  adjustment  of  accrued  and  unpaid  interest  upon  the 
Adjustment  Bonds. 

Note  2.  In  addition  to  the  foregoing,  the  Old  Denver  Company  was  liable  on  the  judgment  recovered  by  The  Equitable 
Trust  Company  of  New  York,  amounting  at  the  date  of  the  sale  to  about  $35,224,493.  For  this  judgment  the  New 
Company  is  not  liable.  But  taking  this  judgment  into  consideration  as  a capital  charge  of  the  Old  Denver  Company, 
the  amount  of  the  indebtedness  of  a capital  nature  will  on  the  completion  of  the  reorganization  have  been  reduced. 


By  the  amount  above  stated $23,387,000 

By  the  amount  of  said  judgment 35,224,493 

Total  $58,611,493 


16 


Exhibit  2. 


THE  DENVER  AND  RIO  GRANDE  WESTERN  RAILROAD  COMPANY. 


Condensed  Balance  Sheet  As  of  12:01  A.  M.,  August  1,  1921. 

The  assets  and  liabilities  are  stated  and  entries  made,  as  follows,  by  adoption  of  results  of  figures  set  up  on 

books  of  The  Denver  and  Rio  Grande  Railroad  Company  and  the  Receiver.  They  are  in  all  respects  subject  to  revision 

with  approval  of  competent  authority  and  are  not  to  be  deemed  representation  of  value  or  admission  of  liability  by 
this  Company. 

ASSET  SIDE 

Investments  : 

701  Investment  in  Road  and  Equipment $181,523,042.31 

702  Improvements  on  Leased  Railway  Property 179,722.04 

703  Sinking  Funds: 

Sinking  Fund — Refunding  Mortgage : 

Total  Book  Assets  at  Date $2,455,639.25 

Carriers  Own  Issues  at  Date 2,455,000.00 

Other  Assets  at  Date 

704  Deposits  in  Lieu  of  Mortgaged  Property  sold: 

Bankers  Trust  Company,  Trustee 

705  Miscellaneous  Physical  Property 

706  Investment  in  Affiliated  Companies : 

Pledged : 

(a)  Stocks: 

Rio  Grande  Junction  Ry.  Co $591,696.18 

Rio  Grande  & Southwestern  R.  R.  Co 217,465.20  809,161.38 


639.25 

3,465.89 

274,774.26 


Unpledged : 

(a)  Stocks: 

Rio  Grande  Junction  Ry.  Co $700.00 

Pueblo  Llnion  Depot  & R.  R.  Co 8,120.00 

Denver  Union  Terminal  Ry.  Co 5,000.00 

Salt  Lake  City  Union  Depot  & R.  R.  Co 100,100.00  113,920.00 


707  Other  Investments : 
Unpledged  


Current  Assets  : 

708  Cash 

R.  F.  Watkins,  Treasurer $885,948.61 

711  Special  Deposits: 

Special  Deposits  22,265.9 3 

Cash  Deposited  to  Pay  Coupons ; 353,745.00 

Adj.  Mtge.  Deposited  Funds  and  Int 21,850.25 

Miscellaneous  Special  Deposits 215.14 

First  Con.  Mtge.  Bonds  with  Blair  & Co.,  Trustee 200,000.00 


Total  598,076.32 

Carriers  Own  Issues  at  Date 200,000.00  398,076.32 


713  Traffic  & Car  Services  and  (714)  Agents  and  Conductors  Net  Balances — Receivable 

715  Miscellaneous  Accounts  and  (718)  Rents  Receivable 

716  Material  and  Supplies  and  (719)  Other  Current  Assets 


923,081.38 

9,625.78 


1,284,024.9 3 

1,181,064.38 

1,570,352.53 

3,978,503.34 


Deferred  Assets  : 

720  Working  Fund  Advances  and  (722)  Other  Deferred  Assets  80,737.11 

Unadjusted  Debits  : 

723  Rents  and  Insurance  Premiums  Paid  in  Advance  and  (727)  Other  Unadjusted  Debits 193,639.23 

Total  $191,202,672.43 


17 


Exhibit  2 (Con.). 
LIABILITY  SIDE 


Stock  : 

751  Capital  Stock: 

(a)  Common  Stock: 

Not  Held  by  Company  (300,000)  Shares 

This  book  value  of  capital  stock  is  obtained  by  the  adoption  (as  explained  in 
the  preliminary  note  immediately  preceding  this  statement)  of  the  difference  be- 
tween Book  Assets  and  Book  Liabilities  (other  than  capital  stock)  and  is  not  a rep- 
resentation or  admission  on  the  part  of  this  Company. 

Long  Term  Debt: 

755  Funded  Debt  Unmatured: 

The  debt  represented  by  and  set  forth  in  this  account  755,  represents  mortgage 
bonds  charged  upon  the  property  by  predecessors  (in  ownership)  of  this  company, 
and  subject  to  which  this  company  acquired  the  property,  but  such  debt  has  not 
been  assumed  as  any  part  of  the  debt  of  this  company,  except  as  the  property  so 
acquired  is  charged  therewith. 

( b ) Mortgage  Bonds: 

Held  by  Company: 

D&RGRRCo.  First  Con.  Mtge.  4%  Bonds $1,445,000.00 


D&RGRRCo.  First  & Ref.  Mtge.  5%  Bonds: 

In  Treasury  

New  York  Tr.  Co.,  Trustee 

Skg.  Fund  Ref.  Mtge 

RGWRy.  Co.  First  Trust  Mtge.  4%  Bonds.... 

RGWRy.  Co.  First  Con.  Mtge.  4%  Bonds 

Utah  Central  R.  R.  Co.  First  Mtge.  4%  Bonds 


Not  Held  by  Company: 

D&RGRRCo.  First  Con.  Mtge.  4%  Bonds... 
D&RGRRCo.  First  Con.  Mtge.  4p2%  Bonds. 
D&RGRRCo.  Improvement  Mtge.  5%  Bonds 
D&RGRRCo.  First  & Ref.  Mtge.  5%  Bonds. 
RGWRy.  Co.  First  Trust  Mtge.  4%  Bonds. 
RGWRy.  Co.  First  Con.  Mtge.  4%  Bonds... 

( d ) Income  Bonds: 

Not  Held  by  Company: 

D&RGRRCo.  Adj.  Mtge.  7%  Bonds 

D&RGRRCo.  Adj.  Mtge.  7%  Bond  Scrip... 

Book  Liability  at  Date 

Held  by  or  for  Carrier  at  Date 


$1,112,000.00 

7.005.000. 00 

2.455.000. 00  $10,572,000.00 


10,000.00 

1,395,000.00 

650,000.00 


$14,072,000.00 


$34,125,000.00 

6.382.000. 00 

8.335.000. 00 

31.489.000. 00 

15.190.000. 00 

15.080.000. 00 


$110,601,000.00  $124,673,000.00 

$9,999,000.00 

1,000.00  10,000,000.00 


$134,673,000.00 

14,072,000.00 


Current  Liabilities  : 

759  Traffic  and  Car  Service  Balances  Payable $325,970.02 

760  Audited  Accounts  and  Wages  Payable 2,590,688.02 

761  Miscellaneous  Accounts  Payable 195,604.00 

762  Interest  Matured  Unpaid 1,195,845.00 

766  LJnmatured  Interest  Accrued 692,798.35 

767  Unmatured  Rents  Accrued 316,204.59 

768  Other  Current  Liabilities 48,418.99 


Deferred  Liabilities  : 

770  Deposits  for  Construction  of  Tracks 

Unadjusted  Credits: 

771  Tax  Liability — Accrued  Taxes $1,024,922.50 

776  Accrued  Depreciation — Equipment  5,768,379.38 

778  Other  Unadjusted  Credits 347,865.77 


Total 


$58,011,411.04 


120,601,000.00 


5,365,528.97 

83,564.77 


7,141,167.65 

$191,202,672.43 


18 


Exhibit  3. 


THE  DENVER  AND  RIO  GRANDE  RAILROAD  COMPANY. 
Income  1901  to  1920,  inclusive. 

Applicable  to  interest  on  Funded  Debt. 


In  the  following  balances,  (in  order  to  make  the  figures  comparable  with  those  arising  from  operations 
under  existing  conditions),  dividends — except  dividend  on  Rio  Grande  Junction  Railway  Company  stock — 
interest  on  securities,  and  interest  on  bank  balances  have  been  excluded,  and  taxes  have  been  included. 

1901  Fiscal  Year,  ended  June  30th $5,529,074.90 

1902  5,983,801.48 

1903  5,883,873.04 

1904  5,582,769.50 

1905  5,968,684.74 

1906  6,694,154.37 

1907  6,966,586.25 

1908  6,336,525.79 

1909  5,437,017.24 

1910  6,626,930.06 

1911  6,340,526.61 

1912  5,213,179.54 

1913  6,370,761.88 

1914  6,046,218.58 

1915  6,369,084.21 

1916  8,818,575.34 

1916  Calendar  Year,  ended  Dec.  31st 9,262,536.27 

1917  7,028,297.96 

*1918 6,226,565.2 7 

*1919 5,683,478.93 

*1920 7,081,951.85 

* Figures  for  1918-1919  and  two  months  of  1920  are  consolidated  Corporate  and  Federal  operations.  Include  Gov- 
ernment earnings  net;  do  not  include  payments  in  excess  thereof  under  Government  Control  or  Guaranty. 


19 


Exhibit  4. 


THE  DENVER  AND  RIO  GRANDE  WESTERN  RAILROAD  COMPANY. 

INCOME  ELEVEN  MONTHS  1921. 


Operating  Revenue 

Operating  Expenses 

Net  Revenue 

Tax  Accruals 

Uncollectible  Revenue 

Operating  Income 

Non  Operating  Income 

Total  Income 

Income  Charges 

Balance  applicable  to  Interest  on  Funded  Debt 
Interest  on  Underlying  Bonds 

Interest  on  1st  & Refunding  Bonds 

Sinking  Fund  1st  & Refunding  Bonds 


6 Months  to 

July  to  Nov. 

11  Months  to 

June  30,  1921. 

Inclusive,  1921. 

Nov.  30,  1921. 

$14,214,838.79 

$15,998,482.67 

$30,213,321.46 

12,667,944.49 

13,139,699.88 

25,807,644.37 

1,546,894.30 

2,858,782.79 

4,405,677.09 

881,622.13 

785,346.06 

1,666,968.19 

5,157.29 

1,823.38 

6,980.67 

660,114.88 

2,071,613.35 

2,731,728.23 

1,547,830.43 

834,294.72 

2,382,125.15 

2,207,945.31 

2,905,908.07 

5,113,853.38 

1,011,927.10 

1,067,246.45 

2,079,173.55 

1,196,018.21 

1,838,661.62 

3,034,679.83 

1,639,870.00 

1,366,558.33 

3,006,428.33 

US, 851. 7 9 

472,103.29 

28,251.50 

788,882.07 

650,267.38 

1,439,149.45 

1,232,733.86 

178,16^.09 

1,410,897.95 

117,294.14 

158,247.08 

275,541.22 

1,350,028.00 

336,411.17 

1,686,439.17 

350,000.00 

291,666.6 7 

641,666 .67 

1,700,028.00 

628,077.84 

2,328,105.84 

Interest  on  7%  Adjustment  Bonds 
Deficit  

July  Operations — By  Receiver 
August  to  November  Operations — By  The  Denver  and  Rio  Grande  Western  Railroad  Company 

Italics  indicate  deficits. 


20 


Exhibit  5. 


To  The  Board  of  Directors  of 

The  Western  Pacific  Railroad  Corporation  : 


At  New  York,  October  27,  1921. 


Sirs  : 


As  requested,  I have  familiarized  myself  with  various  reports  and  estimates  which  have  been  made 
by  engineers  and  by  my  predecessors  in  the  management  concerning  expenditures  necessary  for  rehabilitation 
and  improvement  of  the  Denver  & Rio  Grande  system.  Both  before  and  since  assuming  the  office  of 
President  of  The  Denver  & Rio  Grande  Western  Railroad  Company,  I have  given  a great  deal  of  attention 
to  the  examination  of  the  physical  properties  and  facilities  of  that  Company  and  to  the  problem  of  its  neces- 
sary betterment.  My  conclusions,  very  briefly  summarized,  are  as  follows : 

It  will  be  necessary  to  expend  during  the  next  five  years  upon  road,  structures  and  equipment, 
including  a relatively  small  expenditure  for  extensions,  not  less  than  the  sum  of  $20,670,237.00.  It  would 
be  desirable,  in  my  judgment,  to  expend  more  than  that  amount,  but  in  naming  that  figure  I confine  myself 
to  a sum  which  I regard  as  essential,  speaking  with  respect  both  to  the  safety  and  efficiency  of  operation  in 
the  interest  of  the  public  and  to  profitable  operation  in  the  interest  of  its  security  holders.  My  estimate  is 
based  upon  the  following  requirements : 


Description 

River  Protection,  Channel  Changes,  Widening  Roadbed  and  Ballast- 
ing-   

Rail  & Other  Track  Material 

Bridges  & Culverts,  Tunnels  & Subways,  Grade  Crossings,  Signals 
& Interlockers,  Fences  & Snow  Sheds,  Stations,  Fuel  & Water 

Facilities,  etc 

Shop  Buildings,  Shop  Fixtures  & Tools  and  Engine  Houses  

Equipment  : 

Betterments  to  Equipment 

New  Equipment 

Urgently  necessary  additions  to  and  improvements  of  Trackage  

Total 


Total  Cost 

Charge  to 
Capital 

Charge  to 
Operation 

$2,427,500 

4.561,000 

$2,097,500 

1,650,000 

$330,000 

2,911,000 

2,065,037 

708,600 

1,308,000 

634,500 

757,037 

74,100 

1,653,500 

6,154,600 

3,100,000 

846,000 

6,154,600 

3,100,000 

807,500 

$20,670,237 

$15,790,600 

$4,879,637 

The  foregoing  estimated  expenditures,  will,  in  my  opinion,  be  required  during  the  years  1922  to  1926, 
inclusive.  There  are  also  other  items  of  improvement  which  are  highly  desirable  and  for  which  this  estimate 
contains  no  provision.  For  example,  no  allowance  is  made  for  shops  other  than  the  improvement  of  exist- 
ing facilities.  It  must  be  understood  that  other  very  substantial  expenditures  must  be  made  during  the 
years  immediately  following  1926,  and  that  also  as  expenditures  are  made  experience  may  indicate  somewhat 
different  subdivisions  of  the  expenditures  now  foreseen,  although  a reduction  of  the  aggregate  seems  highly 
improbable. 

Respectfully  submitted,. 

(Sig.)  J.  H.  YOUNG. 


21 


Exhibit  6. 


A.  R.  Baldwin 

President 


THE  WESTERN  REALTY  COMPANY 
(Roberts  Lumber  Company) 


C.  B.  Hotchkiss 

Secretary 


321  Equitable  Building 
Denver,  Colo. 


43  Exchange  Place, 

New  York,  January  18,  1922. 


Mr.  John  Henry  Hammond,  Chairman  of  the  Committee, 

Constituted  by  the  Deposit  Agreement,  Dated  May  28,  1917, 

for  the  First  and  Refunding  5 % Mortgage  Gold  Bonds  of 
The  Denver  and  Rio  Grande  Railroad  Company, 

59  Wall  Street,  New  York  City,  N.  Y. 

Dear  Sir: 

You  have  inquired  from  me  as  to  the  estimated  value  of  The  Western  Realty  Company  stock  referred 
to  in  the  Plan  of  Reorganization  of  The  Denver  and  Rio  Grande  Railroad  as  being  an  asset  which,  under 
the  terms  of  the  plan,  may  be  transferred  to  the  reorganized  company,  as  of  the  value  of  at  least  one 
million  dollars. 

In  my  opinion,  which  is  based  upon  a recent  report  of  competent  timber  cruisers  and  appraisers  relat- 
ing to  the  timber  holdings  of  the  Company,  the  stock  of  this  Company,  after  taking  into  consideration  all 
assets,  less  all  liabilities,  represents  a net  value  in  excess  of  one  million  dollars. 

Yours  very  truly, 

(Signed)  A.  R.  BALDWIN. 


Annexed  to  the  Original  Plan  is  an  Agreement  of  Reorganization  in  substantially  the  customary  form. 


22 


